Another verse that Islam-haters use to support terrorism is:
8:12-13... I will instill terror into the hearts of the unbelievers. Smite ye above their necks and smite all their finger tips off them. This because they contend against God and his apostle. ...
This is another verse that is commonly quoted out of context, both historical context and the context of the verse itself in the Qur'an. Let us first examine the full verse:
8:12-13 Recall that your Lord inspired the angels: "I am with you; so support those who believed. I will throw terror into the hearts of those who disbelieved. You may strike them above the necks, and you may strike even every finger." This is what they have justly incurred by FIGHTING God and His messenger. For those who fight against God and His messenger, God's retribution is severe.
That is the context of the verse in the Qur'an. The historical context is that this verse was revealed at the Battle of Badr, a battle in which the pagans of Makkah traveled over 200 miles to destroy the muslims of Madinah. The Pagans of Makkah had an army of about 1000 while the muslims were only 300 followers. The Prophet Muhammad (pbuh) and his followers had suffered severe persecutions and torture for 13 years in the city of Makkah. And now that they had fled Makkah and found a sanctuary in the city of Madinah, they were once again threatened. The enemy came to them with the intent to kill Muslims. It was a war to defend themselves and their Faith. It was a war imposed upon Muslims.
So God supported the Muslims and informed them that God would allow justice to prevail over oppression. He informed them that they should not fear fighting in God's path, but it is the enemies who should fear God's retribution for their oppression and injustice. Also, the previously mentioned laws of Jihaad all applied here and the muslims were commanded:
8:61 But if the enemy incline towards peace, do thou (also) incline towards
peace, and trust in God: for He is One that hears and knows (all things).