Khairi Abaza is a senior fellow at the Foundation for the Defense of Democracies; a foundation focused on reforming the middle east through democracy.  I’ve outlined some very interesting points from his article: Khairi Abaza: Socio-political roots of Arab terrorism
After being dominated by foreign powers during the first half of the 20th Century, the Arab street was buoyed by hopes of “liberation” following World War II. Instead, colonial rule was replaced with oppressive and inefficient national governments. These regimes have failed to secure economic or social progress, and have denied political liberties. Most damaging, they redirected the desire of their citizens for a restored sense of pride to an external cause: the liberation of Palestine and the defeat of the “Zionist enemy,” on which they blamed all the region’s woes.
Arab nationalism, the misused ideology in these conflicts, was created by Arab Christians in the Levant in the late 19th Century, as a way to unite the Arabic-speaking population of the Mideast and North Africa on a cultural-ethnic ground, rather than a religious one — namely, Islam. The Arab-nationalist ideology eventually became the legitimizing ideology of every Arab dictator. But it failed to “liberate Palestine” or to create a unified Arab world. The ensuing conflicts with Israel led only to defeat upon defeat, deepening humiliation and frustration. Its main legacy: uniting the Arab public in humiliation, pain and sorrow, increasing the desire to vanquish Israel and thus restore lost Arab pride, at any cost.
All of them exploit the Arab public’s sense of humiliation to mobilize support for their personal ambitions.
Already, there is pressure on the Bush administration from both the right and the left to give up on the administration’s dream of a democratic Mideast. But this would be a terrible mistake.
A return to the so-called realism in which tyrants are tolerated as long as they keep their restive populations contained and their fiefdoms stable will ensure only that the Mideast remains the number-one recruiting ground for terrorists. Good governance won’t solve every problem of the Mideast, but it must be part of the solution.