If the Muslims revere the 7th century so much, maybe the best way to deal with them is send them there. Randomly attack power stations, factories, dams... if it didn't exist in the 7th century, bomb it. Cut off all welfare, cut off all import into that part of the world and cut off all import from that part of the world. The only goods going into Arab nations would be food. Let them wither on the vine for a while. Even if they don't decide to modernize, the starvation and disease that would occur would limit the population and stop them from being any kind of threat.
It's not pretty, but it is an idea.