If heter makhira could work after the establishment of the State, it would require the Knesset to invoke it. That legalistic gesture would however be a catastrophe.
Were the Knesset to invoke heter makhira, it would signify that the people of Israel were willing to release their sovereignty over their land and to put that sovereignty in the trust of another people. That would be both preposterous, and it would weaken in their own eyes as well as in the eyes of the world the claim the people of Israel had to the land.
Furthermore, it would make a mockery of the relation between the people of Israel and God.