Ethnic nationalism is just racism, whether practiced by white supremacist MAGA Americans or Holocaust survivors. In a liberal democracy, the government serves all people regardless of race. I'm confused by your premise that Holocaust survivors were entitled to their own ethnic state for some reason.
Also, the Zionist movement was not a response to the Holocaust. It was a colonial enterprise that began well before the Holocaust in response to widespread persecution especially in Central Europe. Many Jews opposed the Jewish nationalism undergirding Zionism for the same reasons liberals today reject virtually all nationalist movements. Many emigrated to liberal democracies like the United States where they could live free of ethnic discrimination. Zionists instead chose to respond with their own ethnic persecution.
It is worth recalling in this connection that at the turn of the century,
Zionism's similarities to other projects of colonization were not a source of
embarrassment or shame for most of the movement's adherents; indeed, they
often saw them as a selling point. Zionist leaders studied and sought to learn
from the experience of European colonial-settlement enterprises in places like
Algeria, Rhodesia, and Kenya, and many imagined their own endeavor as
similar in certain ways. Moreover, the Zionist movement readily used such
terms as “colony,” “colonial,” and “colonization” to refer to its activities; thus,
for example, the original name of its financial arm was the Jewish Colonial
Trust. It was only later, after the First World War, that colonialism came to
have strongly pejorative connotations for many Europeans. As a consequence
the Zionist movement sought to dissociate itself from other European projects
of colonization and settlement, began to stress the uniqueness and noncolonial
character of its mission and methods, and stopped using such terms, at least
in languages other than Hebrew.
Zachary Lockman, Comrades and Enemies: Arab and Jewish Workers in
Palestine, 1906-1948 (University of California Press, 1996) 21-57.