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When considering the Old Testament, we need to remember that something both Catholics and the Jewish people hold in common is that we are not sola scriptura: we believe that tradition illuminates Scripture and is essential to properly understand it. It would have been unthinkable to the authors of the Old Testament and the communities that received them that they would be understood outside of the tradition that surrounds them.
That being said, genocide does not really accurately describe this command. Jewish tradition is quite clear that members of the Amalek tribe could be accepted as converts to Judaism and that peace terms could be held with them.
According to the Talmud, when the Israelites entered the Promised Land, they sent terms to all the tribes dwelling there. The terms were that those tribes were to abandon their ways and follow the Noahide Laws (do not deny God, do not blaspheme God, do not murder, do not engage in illicit sexual relations, do not steal, do not eat of a live animal, and a legal system for law). So there was a way for the tribes to avoid annihilation. Jewish scholars also point out that, when laying siege to a town, Jewish soldiers were commanded to always leave a clear path for inhabitants to flee, thus rendering anyone in the city a definite supporter of the opposing army.
The tribe of Amalek not only refused peace terms but actively sought to annihilate the Israelites (Deut. 25:17-18). While the Bible only mentions in general that the Amalekites attacked the Jews, the Talmud and midrash state that the Amalekites raped, castrated, and murdered the Jewish men they conquered. According to midrash, Amalek was the grandson of Esau, who had tried to kill Jacob. On his deathbed, Esau was said to have commanded Amalek and his descendants to wipe out the descendants of Jacob (the Israelites).
It was thus said that as long as one descendant of Amalek is alive, he will attempt to annihilate the Jewish people. Centuries later, in the Book of Esther (3:5-6), this almost comes to fruition in the person of King Haman, a descendant of Amalek. So this was not a matter of simple dispute over territory but a struggle for the very survival of the Jewish race.
Take the popular hypothetical moral question: “if you could travel back in time and kill [insert name of an evil person] when he was a baby, would you do it?” Even if we don’t think we’d be able to do it, we can understand why someone else would say yes. We understand because we know the evil they will later inflict, and God certainly knows the future actions of every person.
Jewish tradition has always been uneasy about this command, and some segments of tradition have seen the command as a symbolic reflection rather than a literal command in history. The tribe of Amalek is seen as symbolic of all things opposed to God and his laws, both in the world and in our own hearts. They say that Amalek is a way of being, not a genetic trait. As such, Maimonides taught that the commandment is not necessarily fulfilled through killing; it can be fulfilled through moral influence and education.
This tradition sees the command not as a historical event but a reflection using this story as an example that the faithful must always be on guard to purge unfaithfulness to the covenant, no matter how small, from their midst and from their hearts.