I guess he means a state that’s ok with illegal settlements and apartheid treatment.
Why would he mean that?
I think it's more likely that he's idealizing a future where Israel and Palestine forget their history and trauma and suddenly become best buddies who root for each other's success because no one is interested in inflicting any more pain on the other. This is a pointless exercise in imagination but it's probably what he's going for with this statement.
And? What's circular about it? Nations arise from self organizing societies, and these nations come together to define international laws. And then they define the right of self affirmation, and if the main powers recognize a state it is assigned the right to exist. And if the core powers of this world decide that a country does not matter, they'll look the other way as those rights are bombed. It's an emergent property of international politics.
No rights do, so I don't understand where you're going with this.