Is there a need, or even a duty, to establish an Islamic state?
No. The Holy Qur’an prescribes no particular political system. What it requires of every government is absolute justice for all citizens. Islam seeks to rule in people’s hearts, not through the power of the state.
Islam is a way of life that touches every aspect of human existence. Yet this does not set it apart from earlier religions. The messages God gave to Noah (as), Abraham (as), Moses (as) and Jesus (as) were also a complete way of life for their own time. Islam is the perfected stage of this development, but it was not the first religion to address economic and social life.
The Holy Qur’an does not prescribe a specific model of state. It sets out one principle that stands above all politics. Whoever governs must govern with absolute justice. Every inhabitant of a country has the same rights as every other, whatever his religion. Anyone who makes distinctions here violates that principle. The second verse above demands justice even towards a people who are hostile to you.
History also shows that state power is not a precondition for Islam. The Holy Prophet Muhammad (saw) spent thirteen years in Makkah without any power at all. It was precisely in this period that his companions became models of truthfulness and purity. When dynasties later ruled in the name of Islam, by contrast, its teaching was often distorted.
Faith imposed by force does not produce believers but hypocrites. They bow to those in power, not to God. That is why the last verse above says there is no compulsion in religion. What Islam needs is firm conviction, the fear of God and a good example. In this way it can be lived anywhere in the world, in every country and under every government.