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Palestine isn't a desert. And wouldn't if be fair to give the Palestinians their land back before you started discussing whether or not they'll form a democracy?
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Give whose country back to whom? Both sides have valid historical claims to the area.
(And semi-arid counts as a desert to me.
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Gaza remains essentially contained and controlled by Israel, but inside the Strip, the Islamist group Hamas is now in charge and appears to be turning the area into a harsh, veiled theocracy.
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They used democracy to elect Hamas. And now that they have a walled area all their own, they're not exactly implementing free elections. Thus, I say we have no assurances they will form a democracy, given their own state, or even the entire current state.
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I would suggest that it is a way to wage war that takes a very long range view indeed and a devastatingly powerful one.
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But not long enough. If the Jews start having as many children as the Palestinians, then it solves nothing but pushes the problem back several generations, until ultimately the area has a greater population than the land will support. It's a tactic that works only in small areas, but if it was widely implemented the whole world would be hurting.