Is a country that does not fully implement an Islamic system automatically Darul Kufr, with its residents judged to be disbelievers?

Summary

The division of countries into Darul Islam and Darul Kufr is a matter of ijtihad on which scholars differ, with no specific text from the Quran or Sunnah. Holding to one definition is not grounds for declaring others disbelievers. The verifying scholars take security in practising religion as the basis of the ruling, and Shaykh Muhammad Abu Zahrah chose Abu Hanifah's view that the basis is the security of a Muslim. The Shafi'i school holds that Darul Islam never becomes Darul Kufr, the Maliki and Hanbali schools together with Abu Yusuf and Muhammad allow the change once non-Islamic rulings become dominant, while Abu Hanifah requires three conditions.

Written in our own words from the original fatwa — check the source before acting on it.