The prominent Saudi scholar, Shaykh Salmân Al-'Awdah touches upon this issue towards the end of the following fatwa:
The Muslim is taught by his book, the Qur’ân, to hate falsehood, distorted beliefs, and deviance, and consequently, to hate the representation of falsehood and deviant beliefs at the hands of the unbelievers. He does not, however, hate the people themselves. In fact, he should wish for them every possible good and hope that they will attain guidance and be saved from the Hellfire.
When one of the unbelievers attains guidance, the Muslim should be as joyous for his sake as our Prophet (peace be upon him) was when a Jewish boy converted to Islam just before he died. The Prophet (peace be upon him) left his home saying: “All praises are for Allah who saved him from the Hellfire.”
The hatred one should have is for their deviance or sinful behavior, not for the people themselves.
This is why a Muslim cannot be blamed for his affection towards his son, wife, and others, even if they are not Muslims. However, such affection should not cause him to neglect any part of his religion. That is why the Muslims who, on account of their wives and children, failed to emigrate to Madinah as they were commanded were rebuked for staying behind. Indeed, Allah describes our wives and children as a trial.
In fact, the ones who encourage hatred are certain Western and other non-Muslim politicians and media personalities who seem to be doing everything in their power to instigate conflicts against Muslims in various parts of the world. By their practices, they seem to be trying to give the Muslims lessons in hatred and rancor.
If there are some moderate and reasonable voices in the West and in places like India, they are being drowned out by the overwhelming clamor of extremism and anti-Islamic rhetoric. Admittedly, the same thing can be said for the Muslims as well. However, I must stress that the West is suffocating the moderate and temperate voices in the Muslim world who are on the correct Islamic methodology, the methodology that is the way of salvation for the Muslim nation.
It is the current political climate which has fueled prejudice and bias in both the western and muslim world and certain elements on both sides seem to be doing everything in their power to drive the two into a collision course.
Non-muslims have historically been very well under Islamic rule and this only changed when people deviated from Islam and secular or heretical groups began to fight for power in the muslim world.
Welldiorant says:
"The people of dhimma: Christians, Zaradishts, Jews and Sabi'a; enjoyed a degree of tolerance during the Umayyad rule which can never be assimilated to Christian countries nowadays. They were free to practice their rituals. They maintained their churches and synagogues and the only obligation was that they should wear a special color and pay tax for every person pro rata his income. This sum ranged between two and four dinars. This tax was exclusively levied on non-Muslims who can go to war. However priests, women, children, slaves, elderly men, the disabled, the blind and the destitute were exempted from the tax. Dhimmis were exempted from military service in return. They were also exempted from zakat which is 2.5% of the annual income and the government was bound to protect them. [The History of Civilization 131/12]
A History of the Jewish People, edited by Haim Hillel Ben-Sasson (Harvard University Press, 1976), an Israeli historian:
"The height of magnificence and luxury was reached by the wealthy Jews in the lands of Islam, particularly in Moslem Spain. We know that the court bankers of Baghdad in the tenth century kept open house for numerous guests and for the poor. Similarly, the ceremonies of the Jewish leaders in Babylonia [Iraq] and the patronage of the leading Jews in Moslem Spain, indicate conditions of ease and plenty.
"The attitude toward these non-Moslems in the Islamic territories was shaped in principle in accordance with the concept of dhimma, meaning protection granted to them by agreement or treaty… In return, their lives and property were protected and, in accordance with the general attitude of Islam to infidels, they were assured liberty of faith and worship. They were also permitted to organize themselves as they wished, and the Jews fully availed themselves of that permission.
"From the Jewish viewpoint, this conglomerate of Moslem attitudes to infidels was easier to live with than the one that had been established by Christianity, particularly in the Byzantine Empire. As we have noted above, for hundreds of years the overwhelming majority of Jews lived in the Islamic territories. Although it is possible to perceive some Christian impact on the Moslem attitude towards non-believers and even towards the Christians themselves, the moderation with which the Moslems applied this influence proved to be of great importance to the majority of Jewry over a long period. Unlike the masses of Christians and pagans who joined the Moslems over the first half century or so, the overwhelming majority of the Jews under Moslem rule held firmly to their own faith."