The First Islamic State:
After the arrival of Prophet Muhammad (Peace Be Upon Him) to Madina it was quite clear that the Prophet (Peace Be Upon Him) and his associates would be the new leaders of Madina.
The (Peace Be Upon Him) invited the representatives of the Muslims as well as the non-Muslim inhabitants of the region i.e. Arabs, Jews, Christians and others, and suggested the establishment of a City State in Madina. A pact defining terms & conditions was then ratified by all Muslims, Christians Arabs and Jews. The Prophet Muhammad was unanimously hailed as the leader of the state. Thus, Madina turned into a small, but the first ever, Muslim state of the world. The pact between all the inhabitants of Madina is known as "Madina Pact".
With their assent, the Prophet (Peace Be Upon Him) endowed the city with a written constitution, the first of its kind in the world, in which he (Peace Be Upon Him) defined the duties and rights both of the citizens and the head of the State and abolished the customary private justice and established an administration of justice for the community.
The document laid down principles of;
Defense and foreign policy.
It organized a system of social insurance, called "Ma'aqil".
In cases of too heavy obligations. It recognized that the Prophet Muhammad would have the final word in all differences.
That there was no limit to his (Peace Be Upon Him) power of legislation.
It recognized also explicitly liberty of religion, particularly for the Jews, to whom the constitutional act afforded equality with Muslims in all that concerned life in this world.
Muhammad (Peace Be Upon Him) also traveled several
times with a view to win the neighboring tribes and to conclude with them
treaties of alliance and mutual help.