The UN Development Programme in a report - the third in a series of assessments of the Arab world - said on Tuesday that partial reform was no longer viable.
"If the repressive situation in Arab countries continues, intensified societal conflict is likely to follow," said the Arab Human Development Report 2004.
The report was drawn up by a group of independent Arab scholars who include the Palestinian human rights lawyer Jonathan Kuttab.
Presenting the report in the Jordanian capital, regional UNDP director Rima Khalaf dismissed the often-heard view that democracy is foreign to Arab culture.
"Some Arab governments have begun to open themselves cautiously and selectively to opposition forces," the report observed. The press release referred to this year's presidential election in the Palestinian territories and the municipal elections in Saudi Arabia.
The UN report welcomed elections
in Palestinian territories
It also acknowledged Egypt's decision in February to allow multi-candidate elections for president.
The release said that while there have been some "real and promising" moves towards greater freedom this year, "overall the pace of progress has been disappointingly limited".
The report also blamed the creation of Israel and the US support for its policies for the lack of reform in the Arab world.
The report cited the creation of Israel as one of the roots of authoritarianism in the Middle East, along with the discovery of oil and the support for dictators by the superpowers during the Cold War.
One of the major causes cited in the report was the occupation of Iraq by the United States and its allies as violations of freedom and obstacles to development.
Khalaf said in the launch address that over a 10th of Arabs now lived under foreign occupation.
"Occupation is a confiscation of rights by violence"
UNDP director Rima Khalaf
"Occupation is a confiscation of rights by violence," she said, adding that last year's Abu Ghraib scandal, when US interrogators tortured Iraqi prisoners, meant detainees' basic rights were no longer protected by international jurisdiction.
The report said occupation of Arab land had given governments an excuse to postpone democratisation, forced Arab reformers to divert energy away from reform and strengthened groups that advocate violence.
It also accused Washington of undermining the international system by repeatedly using or threatening to use its UN Security Council veto, enabling Israel to build new Jewish settlements and extend its barrier in the West Bank.
Israeli, US denial
Israel rebuffed the claims. "For too long too many people in the Arab world have used Israel as an excuse to justify behaviour that cannot be justified," said Mark Regev, spokesman for the Foreign Ministry.
"You can't have democratic elections because of Israel and you can't give equal rights to women in Saudi Arabia because of Israel. This is, of course, a cop out."
"For too long too many people in the Arab world have used Israel as an excuse to justify behaviour that cannot be justified"
Mark Regev, Israeli Foreign Ministry spokesman
A spokesman for the US Near East Affairs Department also spoke out in Israel's defence.
Greg Sullivan rejected the claims, saying: "We think it's misguided to blame Israel for the problems and the challenges that the Arab world faces."
Sullivan also rejected claims that the occupation of Iraq both created excuses for Arab governments to postpone democratisation and strengthened extremist groups which advocate violence.
The 248-page report, published by the United Nations Development Programme, was ready months ago, prior to the Palestinian and Iraqi elections, but its release was delayed because of objections by the US and Egypt.
It was finally released with the UN logo in the preface.