The one thing that all of the revolutions in the Arab world since 2011 have in common is that they installed elected governments in place of dictators. Some Arabists would have had us believe that democracy would never and could never take root among Arabs, and, furthermore, that Arabs as a people did not desire it. That view appears unquestionably to have been discredited. Arabs as a people certainly do want it, participate in elections in larger numbers than Americans when given the chance, and are in many cases willing to fight and die for it, with or without foreign assistance or intervention.
If democracy means voting, then I suppose he is right, but what is that worth? There is too small a constituency for liberal democracy (in the old sense of "liberal"). The number of people in the Islamic arc who are in favor of equality before the law for all regardless of sect, secular governance, and a government with a minimal capacity to redistribute wealth and reward friends and punish enemies is de facto zero. The Islamic arc doesn't need voting, it needs governments that can credibly commit to leaving their people alone for a century or so. And its poverty, ability of insiders to profit from control of the sovereign, sectarianism, and readiness to embrace any leader who claims to be carrying out the will of Allah make this impossible.
It is a valid critique, to point out that in some pockets of Islam they have dipped their toes into the Democratic political process, but this is distinct from a fully functioning democracy.
I think here that the tension between religious sects precludes necessary conditions such as compromise, including setting aside ancient tribal allegiances, abiding respect for the rule of law when it may not coincide with their dogma.
Frankly by nature a large percentage of them are not rational beings and that's a problem...well, the list of unresolved dilemmas and conflicts hinting at enduring chaos in the region is long. I'm also not terribly optimistic for their prospects of realizing anything that approximates a free and open society governed by a liberal system of laws. This might imply supplanting the role and authority of religion in their view-- a bet I wouldn't take. I'm not confident Kagan is optimistic, either, though.