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You are ignoring the fact that for hundreds of years the middle east was the trading crossroads of the civilized world and that right into the 1960's several mid-east countries still had close ties with Britain and France. All without democracy. Mid-east terrorism has grown solely out of the rise of pan-arab nationalism and that is what needs to be addressed if we really want a solution. The US public is being sold democracy as a solution because it's an appealing magic-bullet concept and that is all. If the US government cares at all about democracy in Iraq, it is only because the majority there are not strong enough to take power without US support and we can demand a high price for that support.
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Although they were trading with the world, and were under control (more or less), of Britain and France, those governments had a much greater ability to control the regions peoples through controling access to communication and knowledge of the outside world, by sheer fact of lack of technology in the region, if nothing else. I would submit that the rise of nationalism has been fostered as a tool of those dictatorships in order to give their populations an outlet for the frustration caused by the ever increasing disparity between their poverty stricken lifestyles (since 99% of the wealth is controled by only a few thousand people), and that of the west.
Although I don't see democracy as a "magic bullet", it will be an utterly neccesary step in the process of bringing the region into the international community. History has shown that, although it is certainly not perfect, there is more chance for peace between countries that are representative of their people and are doing business together, than with any other situation.
