The way Maaneh Chochom (R' Yoel Kahn) portrays it, the rebbe defined Zionism out of existence. Basically he held that there cannot be freedom from shibud malchuyos before moshiach, so therefore the State cannot be freedom and cannot be part of the geulah, therefore it is allowed to work with it and even encourage it.
The Torah says it's not going to happen, thus it's nothing. It's like a bunch of Jews with an organization. There will not be a freedom from golus before moshiach says the Torah. Thus what they have isn't a state. They rely on America for weapons etc. It's not freedom. Having a name doesn't make it a country. So it's really mutur because it's not a freedom from golus. So gadolim say it's kefirah and osur. The zionists wanted a state that's free from other nations. That's kefirah.
[I look at it this way. Not a real country. Like kids pretending. Not a real government, not a real constitution, not real courts, not a real army, fake history, fake literature. At Haddassah hospital, the walls are covered with plaques of donations from people in Chutz - Newport Beach, Mexico City, Miami. You wonder, is this a real country? Seems to all come from somewhere else - everything they are most proud of comes from somewhere else.]
https://www.youtube.com/watch?v=HH3z6zu7ytc
the lubavitcher rebbe in theory is anti-zionist but yeah he has excuses for saying zionism isn't zionism