Jews and Muslims in the Middle East
I'm going to skip over the first few centuries, which are made confusing by often porous confessional boundaries and a paucity of sources with the high quality found in those of later times. It is, however, important to note the Covenant of Umar, the document eventually attributed to the reign of the second rightly guided caliph which sets out the laws which dhimmis were to follow as their part of the covenant. These are not in the Qur'an, and in fact many represent continuations of Byzantine and Sassanid practices. Many others, such as the ban on Arabic inscriptions, seem to imply that at the time these regulations actually took shape, authorities were concerned to maintain social and cultural distance between a ruling elite and non-Muslims, who were then a majority of the population outside the Arabian peninsula.
A point which I emphasize to my students, however, is that the Umar document represents the theory, not the practice. Occasionally a ruler would start enforcing most or all of its prohibitions, but more often the main impediments faced by Christians and Jews were those common to all minorities, a popular prejudice against that which was different emphasized especially in times of difficulty. The stereotypes involving Jews in the Muslim Middle Ages more closely resembled that of Hispanics in the contemporary United States than the conspiracy theorizing of today. Another window into non-Muslim communities is that utilized most effectively by S.D. Goitein, the treasure trove of documents known as the Cairo Geniza. Here we see in the voluminous correspondence of medieval Egyptian Jewry that in that place and time, Jews and Christians played important social and political roles and were fully integrated into the large and prosperous economy of the Islamic world.
As might be expected, individuals whose letters are preserved in the Geniza have a variety of opinions regarding their status, but in his A Mediterranean Society, Goitein uses the analogy of "a nation within a nation," noting that they share a common homeland and ultimate government guaranteeing justice and security, but follow different laws and answer to different religious authorities. The importance of that last should not be underestimated, for medieval Muslim rulers relied on religious leaders to govern, and just as the ulema were responsible for the Muslims, so Jewish and Christian communal leaders were responsible for their own people. If I had a book by Mark Cohen lying around I could find a good Jewish example, but the same can be accomplished with this quote on the Coptic Patriarch from C.E. Bosworth's "Christian and Jewish Religious Dignitaries in Mamluk Egypt and Syria: Qalqashandi’s Information on Their Heirarchy, Titulature, and Appointment," on pages 200-1 of the International Journal of Middle East Studies 3:
"He is the leading figure amongst the members of his religious community, and the one with legal authority over them whilst ever he remains their head. They refer to them in all matters concerning what is licit and illicit, and for all their internal legal affairs in which judgement is to be made according to the divine revelation of those parts of the Torah not abrogated by the Gospels."
This is why many Christian and Jewish leaders were required to live in capitals, where the Muslim rulers had easy access to them.
The period of the Crusades and Mongol invasions is usually considered an important turning point in this history. I know more about the Christians, but Jews were also affected by the strong sense of Muslim identity under attack from these outside powers, and subject both to government demands for money to fight these wars and the fact they were, in effect, still outsiders to the now larger, religiously defined Muslim community.
Even then, however, we still don't have anything like the anti-Semitism seen today in much of the Muslim Middle East. When did that start to appear? I will quote at length from Bernard Lewis's The Jews of Islam, pp. 185-6:
"From the late nineteenth century, as a direct result of European influence, movements appear among Muslims of which for the first time one can legitimately use the term anti-Semitic. Hostility to Jews had, of course, roots in the past, but in this era it assumed a new and radically different character...A specific campaign against Jews, expressed in the unmistakeable language of European Christian anti-Semitism, first appeared among (Middle Eastern) Christians in the nineteenth century, and developed among Christians and then Muslims in the twentieth. Mention has already been made of the role of European consuls and traders, working with local Christian minorities, in ousting Jews and securing their replacement by Middle Eastern Christians. They were also active in the spread of certain classical themes of European anti-Semitism - for example, in the introduction of the blood libel, and in conjuring up fantasies of Jewish plots to gain world domination.
"The first anti-Semitic tracts in Arabic appeared toward the end of the nineteenth century. They were translated from French originals - part of the literature of the Dreyfus controversy. Most of the translations were made by Arab Catholics, Maronites, or other Uniate Christians. The first Arabic translation of the most famous of all anti-Semitic forgeries, the so-called Protocols of the Elders of Zion, was published in Cairo in 1927...There is now also available in Arabic a vast literature of anti-Semitic works, translated or adapted from European originals. These include the Nazi classics that form the basis of a large proportion of current Arab writings on Jews, Judaism, and Jewish history, as well as other writers as diverse as Henry Ford and Karl Marx...
"The result of all this is that some of the nastiest inventions of European anti-Semitism have been endorsed in Arab countries at the highest political and academic levels."
Lewis ties this into the idea that Muslims resent the inversion of the order in which their true religion was leading them into a glorious future, though since I understand that theory is riddled with holes I didn't quote it above. The main point is that the deplorable anti-Semitism we see today in places like Iran and Syria has its origins in Europe, not the Qur'an, even if certain Qur'anic verses are occasionally ripped out of context to justify it, and those who draw comparisons between Hamas, Ahmadinejad, and the Nazis might do well to consider their own analogy and remember that "pogrom" is a European word. (As an aside, there are perhaps interesting parallels in Lewis's depiction of the British using allegations of Muslim anti-Semitism to intervene in the Ottoman Empire and certain events in the news today.)
UPDATE: I should note that a couple of the elements in the Covenant of Umar do also have Qur'anic verses interpreted as referring to them. However, it's not in this form, and the historical context isn't that of laying out the rules for interaction in a newly conquered Middle East. In fact, my reluctance to discuss the first few centuries stems in part from our lack of definite understanding of what might have constituted Islam during that period.
UPDATE: There's now a Qur'an note here.
UPDATE: Certain elements of this post are further explained here.
UPDATE: Here's a post based on S.D. Goitein's Geniza research.