They kind of did. It's a completely underdeveloped dump in the back end of nowhere, and unsurprisingly the Jews persuaded to go there mostly left it as soon as they could after WW2.Couldn't they have established Israel in like, a remote area of Russia or something?
The Soviets created it partly because they wanted to populate the area to prevent potential encroachment from China, and I am willing to bet you also because the Soviets, like pretty much everyone else of the era, were bunch of raging antisemites too and wanted to cleanse Jews out from the western Soviet Union where they bothered the Ukrainians, Russians etc. with their very existence.
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However, I do consider it typical of the arrogance, greed and stupidity of the West that upon deciding the Jews needed their own homeland, they handed over someone else's territory to create it. It's not as if places like Australia, Canada and the USA were short of pleasant but little inhabited places for people to thrive, but like fuck were any of our countries going to give up a square inch of their precious land.
In that sense, it's all the fault of our own countries, and none of them give much of a shit about fixing it.