What is the consensus of the four schools of thought about dealing in interest (Riba) in enemy lands (Dar al-Harb)?

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

The ruling of Riba (interest and/or usury) in a non-Muslim country is just as the ruling of Riba in a Muslim country. This is the opinion of the majority of the Muslim scholars; Imams Maalik, Ash-Shafi’ii, Ahmad, Ishaq, Al-Awzaai, and Abu Yousuf the companion of Imam Abu Haneefah. They set forth many proofs from the Quran and the Sunnah that prohibit Riba in general without making any difference between a Muslim country and a non-Muslim country, or between dealing with a Muslim or a non-Muslim.

Imam Abu Haneefah’s opinion is based upon a Dha’eef (weak) Hadeeth; he said: “Riba is not forbidden in Dar al-Harb (the country which is in a state of war with Muslims) between a Muslim and those who are fighting with Muslims if the Muslim gains benefits.”  He based his opinion on the report of Makhool from the Prophet that he said: “There is no Riba between a Muslim and a non-Muslim who is in a state of war, in Dar Al-Harb.”

The first opinion is the preponderant one for many sound texts of the Sharee’ah that prove the prohibition of Riba. What is forbidden in a Muslim country is also forbidden in a non-Muslim country, just like other sins and evil acts. The report of Makhool is Mursal, i.e. there is a narrator missing between Makhool and the Prophet .

It is also possible that the expression ‘there is no Riba’ means do not take Riba.

Allaah Knows best.