Part 1:

The Vatican was a supporter of a Jewish state, but not a happy one, to put it simply. For that reason, full diplomatic relations between the two were not put into place until 1993, and the relations were quite poor in general until the mid-1960s.

Relations were strained by a variety of factors. Among the most important were the Holocaust, the status of Jerusalem, and the Israeli-Arab conflict in general.

The Vatican-Israel relationship actually doesn't start with the founding of Israel. It actually begins with prior discussions of partition, notably in the case of the UN General Assembly Resolution 181, which proposed a partition of the British Mandate. The Vatican was a supporter of Resolution 181, which would have created a Jewish and Palestinian state alongside one another. The reason they supported this was less out of care for Jewish or Palestinian rights, and more out of a desire to see Jerusalem cordoned off; the resolution proposed what is called a corpus separatum, where Jerusalem would be governed as a sort of city-state that would (in theory) thereby give the Church influence over religious holy sites there to a much greater extent than if they were run by another state. In short, the Vatican was concerned that holy sites like the Church of the Holy Sepulchre in Jerusalem would be controlled by any state, and Resolution 181 established Jerusalem as an international city, giving them more of a say in Christian holy sites.

Relations between Israel and the Vatican were, therefore, understandably strained over time. Indeed, as F. Michael Perko put it, there have rarely been "two non-belligerent states" with relations "more torturous and labyrinthine in complexity than Israel and the Vatican". The Church, in the years leading up to the founding of Israel, had made clear that it didn't mind Jews living in the area, but that it did mind "Jewish hegemony", or any system of control that would lead one side to be more powerful than the other. The Vatican was quite happy at the Muslim loss of control in the area (under the Ottomans) to the British, but wanted there to be a relative balance so they could avoid having to deal with a single, unified state. Yet as European control in the Middle East began to wane and the Nazis began to rise, and as the British proposed partition for the first time in 1937, the Vatican was faced with a dilemma. The Vatican did not want the Mandate to end, and made this clear; they preferred British control. But at the same time, if it were to end, they asked that the "corpus separatum" include as much as possible, from Jerusalem to Nazareth to Mt. Tabor. It was this principle of corpus separatum that, as I mentioned above, was the biggest factor for the Vatican in support of Resolution 181. While they were not happy by any means, they were more supportive than not of the partition because of the feeling that Jerusalem would be separated out.

So you can imagine their dismay, of course, when the state of Israel was founded and Jerusalem didn't only fall to non-Jews, but also ended up divided. While the Jordanians captured the majority of the holy sites, taking the "eastern" half of Jerusalem where the Old City was located, that didn't stop Vatican complaints against Israel. The Vatican lodged complaints both over wartime activity surrounding other Christian sites (i.e. in the Galilee), and also lodged complaints over the refugee problem. Because of the Vatican's special place in Catholicism's hierarchy of course (and in a way somewhat similar to Israel's relations with Jews), the Vatican was regularly willing to involve itself somewhat on behalf of the world's Christian minorities. The decision to go to war with Israel made by Arab states and leaders therefore, and the refugee crisis that resulted, led to a large number of displaced Palestinian Christians, which meant the Church not only lost some of its crucial members in the Holy Land but also received urging from these displaced persons to help them. This led to the publication of In Multiplicibus Curis by Pope Pius XII, in 1948, which said that "Palestine occupies a particular place on account of the war which harasses it", and which pushed further for the idea of an internationalized Jerusalem while noting the plight of refugees from the war. It is unsurprising that this theme was reiterated, and the man later known as Pope Paul VI would be quoted as saying to the British Foreign Minister that without recognition of Catholic rights and a promise to internationalize Jerusalem, there "would be no Vatican recognition of Israel". It was simply off the table from the start for quite some time.

Part 2:

All of these factors were part of the "Israeli-Arab conflict" dimension I mentioned that led to friction between the Jewish state and the Holy See. Of course, there was also the matter of history to consider. The Vatican, as I mentioned, was a supporter of Resolution 181, but not really of a Jewish state. This was a fine line to walk, and one filled with nuance. It was for that reason that, during much of the discussion, the Vatican refused to come out in support of one option or another. They were pressured by Middle Eastern congregations to support a unified Arab-run state, but also knew this was untenable without corpus separatum in their books, and they also felt that tipping their hand might lead to repercussions in relations with Arab states or could lead them to be on the losing side on whatever way they chose. That may explain why in 1943 the Vatican was ardently opposed to a Jewish or Arab state in the area, and instead wanted the Great Powers to remain involved.

This tepid support for two states was a historical factor in cold relations between Israel and the Vatican, but it could have been overcome (as indeed it was between the British and Israel, for example). But when combined with the corpus separatum issue, the general conflict, and the last factor I'll talk about, it was fairly insurmountable for quite some time. The last factor, as I mentioned, was the historical relations of the Jewish people with the Catholic Church, exacerbated by the Holocaust. It's no secret that the Catholic Church has had a long history of fairly poor relations with the Jewish people at times, and that fact was on full display following the Holocaust. It took until the 1960s for this to wane somewhat. The state of Israel and the Jewish people in general were quite dismayed by the Vatican's handling of relations with the Nazi regime, and by the general theological handling of Jews, which suggested that they were in some form cursed by God. When Nostra Aetate was issued in 1965 by Pope Paul VI, therefore, it marked a theological sea change of sorts. The Church didn't just reiterate prior statements of opposing racism and discrimination, but it also extended a huge olive branch in the form of a statement regarding its desires to "foster and recommend that mutual understanding and respect" between Catholics and Jews. The declaration went on to note that "Jews should not be presented as rejected or accursed by God" (I know, rather crazy that this had to still be said in 1965), and it noted that it "remembers the bond that spiritually ties the people of the New Covenant to Abraham's stock". This was also relevant to the Zionist movement and the creation of Israel, since a part of Catholic theology that was quite popular in the 19th and early 20th century (and prior) told that the Jewish diaspora and the destruction of ancient Israel was a "curse" in punishment for rejecting Jesus's teachings. So the declaration certainly helped smooth that over. Even so, the legacy of the Holocaust did cause relations to stick prior to then. To expand on that point (since I don't want to gloss over it), despite praise by Jewish leaders of the Vatican's actions during the Holocaust, it was often seen as done to try and get the Vatican to recognize Israel. Behind closed doors, Jewish leaders and Israeli leaders were less than glowing about the Vatican's Holocaust actions. The Pope never really spoke up publicly (and the justifications and arguments for that, and against it, are myriad) about the destruction of European Jewry as it occurred, and roughly 20 years ago (March 1998), the Vatican even issued an apology of sorts for not doing so and not speaking up more forcefully against the Holocaust. While generally being regarded as a "step in the right direction", some (like Efraim Zuroff of the Simon Wiesenthal Center) said that it failed to take any blame for the building of anti-Semitism that culminated in the Holocaust. You see, many Jewish and Israeli leaders argued that the Vatican may not have directly participated, and may have been silent, but also that they helped foster the kinds of anti-Semitism that the Nazis later drew on in evolved forms. The President of the American Jewish Committee, for example, said that it didn't fully acknowledge the "evolution of antisemitism throughout the ages and its culmination in the [Holocaust]" as pushed by the Vatican.

As you can imagine, this type of thing was extremely fraught in the early days of the Jewish state, considering the other factors I already mentioned. There were quite high sensitivities. So despite Golda Meir (then Foreign Minister, later Prime Minister of Israel) saying in 1958 that she appreciated the Vatican's raising of its voice "when fearful martyrdom came to our people" during the Holocaust, there was more to the story. Meir was clearly unhappy with the Vatican's decision not to recognize Israel, though she was pleased with its expanding of relations in 1965. Many were also reluctant, therefore, to say anything publicly about their feelings until after Pope Pius XII's death in 1958, because of the relations themselves. But the straining of relations in general were quite clear enough.

So, now that I've given you backstory and a general outline of the issues involved, as well as the Vatican's general lack of enthusiasm regarding the founding of Israel, maybe now you'll want some specific quotes! Statements are pretty sparse. In Redemptoris nostri cruciatus, the Vatican called for Jerusalem to be granted an "international" status, but statements on the founding of Israel in 1948 were few and far between. I do have some, however.

Archbishop Francis Spellman, in New York, said that the Vatican should oppose partition (and thereby a Jewish state) "primarily on the ground that the whole of the land is sacred to Christ". Thomas McMahon, head of the Catholic Near East Welfare Association, was so upset by the Israeli decision to make Jerusalem the capital of Israel (even though Israel did not control the Old City at the time, and established its capital in the Western half that it did control) that had they known about it beforehand, he said the Vatican would have voted against partition entirely and chosen not to support a state of Israel being established at all. Israel was not shy to respond and note that the Vatican was being slightly hypocritical in failing to protest Jordanian control of (and exclusion of Jews from) the holy sites in the eastern half of Jerusalem, with one official saying that the Church viewed Muslims as the "least objectionable" custodians of the holy sites because the Church had experience with their control in the past. Documentation Catholique, a French Catholic outlet, said in 1949 that "Zionism is a new Nazism", and claimed that Zionism was actually "inspired by a 2000 year old revenge against Christianity" (hint: it wasn't). So while the Vatican was officially silent and avoided precise statements on the subject, its cold relations with Israel, and perhaps even its true general opinion, were echoed throughout Catholic agencies and groups who viewed Israel with suspicion and were still grounded in somewhat anti-Semitic theology.