frekk
Scourge of St. Lawrence
In order to continue providing me with new versions and the occasional bug-filled patch, he/firaxis needs to make a profit. So they do their marketing studies. Usually instead of play testing. And they find what demographics are most likely to BUY the game. This has a larger impact on choosing civs than anything else.
Now that's just a little too cynical. Besides the US and UK, I'm certain the next largest buyer is Canada and I've never seen a Canadian civ. As for people of this/that descent in the US itself, where's Ireland? Brian Boru? Okay, maybe it would be hard to justify - but Italy wouldn't be. Birthplace of the Renaissance, and all.
No, I don't think this is the chief decision. It may weigh in on occasion, but I doubt it's why the Jews aren't included (pretty sure that more Jews buy the game than Portuguese ...)
The criteria, more than anything else, seem to be that at one point, the civ in question was at least moderately powerful relative to other powers on the same continent. This explains pretty much every civ in the game. The Portuguese and Dutch were once colonial powers, Mali had no competitors for thousands of miles, even Korea was once a regional power believe it or not (eg 5th century Goguryeo - China was in disarray and Goguryeo was, for a time, the pre-eminent power in that part of the world). But Israel, well, it never really came close to matching Persia, Babylon, the Assyrians, etc. They were a power but only in the context of a very small area (the Levant).