Step 1: Understanding the Concept:
This quote encapsulates the core idea of the Constitutive Theory of Recognition. This theory posits that a state does not become an international legal person merely by meeting the factual criteria of statehood (population, territory, government, capacity to enter into relations). Instead, it achieves this status only through the act of recognition by other existing states. Recognition "constitutes" the state as a subject of international law.
Step 2: Detailed Explanation:
The leading proponent of the Constitutive Theory was the eminent jurist Lassa Oppenheim. The statement in the question is a classic summary of his view. He argued that before recognition, a new entity is merely a fact and has no rights or obligations under international law. It is the act of recognition by the community of states that confers international personality upon it.
This view is contrasted with the Declaratory Theory, which holds that recognition is merely a formal acknowledgment of a pre-existing fact. According to the declaratory view, an entity becomes a state as soon as it meets the criteria of statehood, and recognition by other states is not a pre-condition for its existence as a legal person.