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As Paul recounts his second trip to Jerusalem, once again we see that the primary issue was that of circumcision. Paul took Titus, a Greek Gentile, with him on that second trip, and Titus remained uncircumcised, before and after (2:3). The point? It proves that back in those early days, no Christian in Jerusalem, including Peter, James and John (2:9), thought that Gentiles needed to be circumcised to be saved. Paul had, in fact, traveled to Jerusalem for the very purpose of submitting the gospel that he had been preaching to the Gentiles to the scrutiny of the highest Christian leaders there. They gave it their full endorsement. Neither Peter, James or John said to Paul, "You must tell the Gentiles that they need to be circumcised to be saved."
At a later point in time, however, Peter succumbed to pressure from Jews who believed otherwise. Paul thus recounts the incident so his readers will know the facts, lest anyone try to dispute Paul's gospel on the basis of Peter's temporary fall from the truth.
Peter had traveled to the thriving Gentile church in Antioch, initially enjoying full fellowship with uncircumcised Gentile believers. He ate with them, something forbidden by Jewish tradition. But when some others, whom Paul refers to as "the party of the circumcision," arrived from Jerusalem, Peter began to "hold himself aloof" from the Gentile believers, and his example was ultimately followed by other Jewish believers in Antioch, including even Barnabas.
Paul could not keep silent about their hypocrisy. They professed to believe that salvation was available to anyone who would believe in Jesus, circumcised or uncircumcised, yet were living in contradiction to their profession. So Paul rebuked Peter publicly, saying (and I paraphrase 2:14): "If you, as a Jew, have been eating with uncircumcised men, indicating by your example that circumcision is not necessary for acceptance by God, why are you now acting in such a way to make Gentiles think that they must be circumcised to be accepted by God?" Again, it is clear that circumcision was the primary issue.
The final six verses of today's reading are not as clear as I wish they were. But this much is clear: the fundamental problem of salvation through circumcision is that it nullifies God's grace and the need for Jesus' death. No Jew has ever been saved by keeping the Law of Moses, because no Jew has yet kept the Law of Moses. Jews, although perhaps not as sinful as the average Gentile (2:15), are still sinners who need grace to be saved, and so salvation is granted to Jews who believe in Jesus. If circumcision doesn't save Jews, why would it be required of Gentiles for salvation?
Paul's testimony, as a Jew, was that "through the Law I died to the Law" (2:19). That is, the Law only condemned him, and so he gave up all hope of being saved by it. Losing hope in the Law, however, is what paved the way for him to ultimately "live to God," that is, live in obedience. Now spiritually reborn, Paul's righteousness stemmed not from his own feeble efforts, but from Christ who lived within him. Everyone who has been genuinely born again can say with Paul, "It is no longer I who live, but Christ lives in me" (2:20). Praise God!
So you can see that Paul's gospel of grace was anything but a license to sin. Rather, it was a message of Christ-empowered holiness. And what an insult it is to Jesus to say to a Gentile for whom He died and within whom He now lives, "If you want to be saved, you must be circumcised and start keeping all the laws given to the Jews." That is tantamount to saying that one is saved by being circumcised and keeping the Law of Moses, and it makes Christ's death needless.
One final point. When Paul submitted to Peter, James and John the gospel he had been preaching to Gentiles, they had nothing to add to it (2:6). They only requested that he "remember the poor" (2:10). We can't rightfully claim to be a "New Testament church" unless we are caring for the poor.