This article takes issue with the Greater Middle East Initiative launched by the U.S. administration and endorsed by the G-8 leaders at the Sea Island Summit, June 2004. It also discusses the problem of democracy and modernity in Muslim societies. The article argues that the U.S. initiative came short of meeting the requirements Of promoting democracy in Muslim countries as it lacks a "carrot and stick" approach in respect of the existing regimes. Then, it disagrees with the prevalent views in the West on the incompatibility of Islam with democracy and Muslims being in fierce opposition to modernity. After presenting practical examples showing that Islam is conducive to democracy, the article concludes by emphasizing the need for dialogue with the Muslim masses.