The issue of citizenship of an Islamic State is a very sensitive one and needs elaboration. This elaboration is all the more required in the wake of events that are ensuing after the tragedy of Sep 11 2001. 
    It is generally held by Muslim authorities that the non-Muslim citizens of an Islamic state are of two categories¹:
    (i) Dhimmis, viz. those who have come under an Islamic State on account of being subdued in a battle. 
    (ii) Musta’mins, viz. non-Muslim residents of Daru’l-Harb who temporarily reside in Daru’l-Islam.
    It needs to be appreciated that both these categories of non-Muslims are specific to the age of the Prophet (sws) and his Companions (rta)². The directives of Fiqh related to Dhimmis and Musta’mins consequently cannot be related to the non-Muslims of today.
The Non-Muslim minorities of today living in Muslim countries can only be classified as Mu‘ahids (citizenship by contract)³. Keeping in view the general welfare of the state, through mutual consent, any contract can be made with non-Muslims of today regarding their rights. As such, all dealings with them should be according to the terms of the treaty concluded with them.
    Muslims are required to abide by these terms in all circumstances and to never violate them in the slightest way. Such violations according to Islam are totally forbidden and, in fact, amount to a grave transgression. The Qur’an says: 

Keep [your] covenants; because indeed you will be held accountable for them. (17:34)

    The Prophet (sws) is reported to have said: 

Beware! I myself shall invoke the justice of the Almighty on the Day of Judgement against the person who oppresses and persecutes a Mu‘ahid, or reduces his rights, or burdens him [with responsibilities] he cannot bear, or takes something from him against his will. (Abu Da’ud: No. 3052)

    In this regard, the Qur’an has explicitly stated the principle that Muslims while dealing with their enemies must not exceed the limits of justice, not to speak of Mu‘ahids who have accepted to live peacefully in an Islamic State: 

And let not the enmity of a people turn you away from justice. Deal justly; this is nearer to piety. (5:8)

    As far as their rights are concerned, they should be given all the rights that are sanctioned by the norms of justice and fairness for people in a civilized society. For example:
    Their life, wealth and honour should be protected by the state such that no one is able to lay hands on them. 
    They can be given independence in their personal law. 
    The needy and poor among them should be provided the basic necessities of life.
    Their personal matters and religious rituals should be exempted from the law of the state and no interference should be made in their faith and religion.
    Their places of worship should be given full protection. 
    They should be allowed to present their religion to others in a polite manner. 
    They should be allowed to be elected to public offices except to those which may require Muslims to preserve the Islamic identity of the state.
    In short, they should be given all the rights which are sanctioned by the norms of justice and fairness for people in a civilized society, and in this regard all dealings should be done in a befitting manner.