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Lit., "transformed [or "transmuted"] them".
I.e., if it had been God's will that men should have no freedom of will or moral choice, He would have endowed them from the very beginning with a spiritually and morally stationary nature, entirely rooted in their instincts ("in their places"), devoid of all urge to advance, and incapable either of positive development or of retreat from a wrong course.
Meaning, We have the ability to turn them into stone or any other inanimate object.
If Allah's Plan had been to grant no limited freedom of choice or will to men, He could have created them quite different, or could have transformed them into stationary creatures, either in physical form as in the case of trees, or in moral or spiritual qualities, where there was no possibility either of progress or deterioration. Man would then have been unable to reach the heights of grandeur which are now open to him, or, if he goes wrong, to return through the door of repentance and mercy, and still pursue his path of ascent. But it was Allah's Plan to give man all these privileges, and man must shoulder all the responsibilities that go with them.