Israel's chief rabbinate cuts ties with the Vatican (this is separate from Israel's diplomatic ties with the Vatican, which remain unchanged). It's unfortunate, but the Catholic Church's decision that bringing a fringe group of conservatives back into the flock was so important so as to require diluting its position against anti-Semitism is one that needed response. I'm glad, frankly, that Israel's Jewish community is standing up for itself in this respect.
I'm not going to pretend the Jewish community is powerful enough to change the Catholic Church's decision, or even really influence it. But we are powerful enough so that we can ignore them if they demonstrate they don't give a fig about what we think.