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The whole of this passage (verses {35-41}) - from which the title of this surah is derived - represents a parenthetic reminder, in the form of Abraham's prayer, of the only way to righteousness, in the deepest sense of the word, open to man: namely, a recognition of God's existence, oneness and uniqueness and, hence, a rejection of all belief in "other powers" supposedly co-existent with Him (cf. verse {30} above). Inasmuch as this prayer implies a realization of, and gratitude for, God's infinite bounty, it connects directly with the preceding verse {34} and the subsequent verse {42}.
The term "idols" (asnam, sing. sanam) does not apply exclusively to actual, concrete representations of false "deities": for shirk - that is, an attribution of divine powers or qualities to anyone or anything beside God - may consist also, as Razi points out, in a worshipful devotion to all manner of "causative agencies and outward means to an end" - an obvious allusion to wealth, power, luck, people's favour or disfavour, and so forth - whereas genuine faith in the oneness and uniqueness of God (at-tawhid al-mahd) consists in divesting oneself of all inner attachment to [such] causative agencies and in being convinced that there exists no real directing power apart from God".
I.e., the land in which the Ka'bah is situated (see surah {2}, note [102]) and, more specifically, Mecca.
This Prayer of Abraham, the True in Faith, the progenitor of the Semitic peoples and the Prototype of their Religion, is introduced in this place, to illustrate the points referred to in the preceding section, xiv. 31-34, viz., how the new Revelation through the Ka'ba bears out the universal Revelation of Prayer and Charity, Love of Allah and man, Recognition of Allah's handiwork in nature, and Insistence on man's turning away from false worship and ingratitude to Allah. Notice the four divisions into which it falls: (1) verses 35-36 are spoken by Abraham as on his own behalf ("O my Lord!"); (2) verses 37-38 are spoken on behalf of his progeny ("O our Lord!") but with special reference to the elder branch, the children of Isma'il; (3) verses 39-40 are again a personal appeal, but both branches of his family, viz., the sons of Isma'il and Isaac, are expressly mentioned; (4) verse 41 is a Prayer for himself, his parents, and all Believers, typifying that in the universality of Islam all nations are to be blessed. Jerusalem, for the Mosaic Law and the Gospel of Jesus, was the centre and symbol for the Jewish race, though of course all Allah's Truth is universal; Makkah, the centre of the Arab race, was to throw off its tribal character and become universal, in spite of the Makkans themselves.
Cf. ii. 125-129. Abraham (with Isma'il) built the Ka'ba, and Abraham asks a blessing on his handiwork and forgiveness for such lapses into idolatry as both branches of his family might fall into.