GOD IN THE OLD TESTAMENT

In the Old Testament, we can see several places that portray God as the most gracious and the most merciful. However, when God accompanied the Israelites to their promised land, he said that he would destroy the seven nations of that area (Canaanites, Hittites, Amorites, Hivites, and Jebusites) so that the Israelites could take their place. Why does God love the Israelites so much that he can also show his mercy and love to all the other nations and people he created? Are only Israelites entitled to his love, and not modern-day Christians who follow the teachings of Jesus Christ? If not, then why did Jesus say he came to fulfill the laws of Moses? (In Matthew 5:17, Jesus says, "Do not think that I have come to abolish the Law or the Prophets; I have not come to abolish them but to fulfill them.") Are other people not worthy of God's love?