The study determines that Saudi Arabia, Libya, and Syria are among the most repressive in the region, followed by Tunisia and the United Arab Emirates.
They regard Israel as the most free and democratic, followed by Lebanon, the Palestinian Territories, Kuwait, and post-election Iraq.
But EIU director David Butter says that, in fact, the majority of the 20 countries studied fell short of basic democratic standards.
"We are talking about the possibilities of a genuine democratic system in which free voting for representative bodies has to be a fundamental element," Butter says. "The difficulty in the Middle East really is that among the Arab countries at the moment -- even though they do have some direct elections of presidents, for example in Algeria -- you really are not talking about any really functioning free democratic systems at all."
The EIU's work consisted primarily of evaluating 15 indicators of political and civil liberties, including elections, rule of law, and press and religious freedoms.
Butter says the "mere existence of parliaments" does not necessarily translate into democracy. He says the EIU rankings reflect that reality.
"Just above Saudi Arabia [in the rankings], you have countries like Syria and Tunisia -- which in a formal sense do have elected parliaments," Butter says. "But they carry very little credibility. And I think perhaps you could even argue that they're even less representative than some of the appointed consultative bodies you have in the [Persian] Gulf, including in Saudi Arabia."
The strongest criticism in the report is reserved for Saudi Arabia. The EIU says that the limited civil space that exists in Saudi Arabia is "largely occupied by a highly conservative form of Islam and by extensive and influential tribal organization." It notes that the municipal bodies currently being elected in the Saudi kingdom have limited powers -- and it stresses that women are still excluded.
"The methodology we had, which emphasized democratic institutions, meant that we did get this result of Saudi Arabia and Libya showing the bottom spot," he says. "I think really [that] if you are looking at a genuine pluralistic and democratic system, you do have to start off from the fundamental point of having institutions in which people are voted. And so, from that perspective, Saudi Arabia does come low."
In the case of Iran, which researchers ranked 14th in the survey, elections and legislative bodies are in place. But they can be overruled by other branches of power.
"You don't expect Saudi Arabia and Libya to be a democratic system," says Ali Noorizade, director of the Arab-Iranian Studies Centre in London. "But in Iran, we have a system which claims that it is a democratic, elected government. They call it 'Islamic democracy.' But the problem is [that] they have tools and systems which prevent the result of people's participation to be respected and to be followed."
Noorizade says such fundamental distortions of democracy occur at the very top of Iranian state structures.
"When a president with 24 million votes goes to office, he has to get the approval of a nonelected so called 'supreme leader.' The constitution gives [the supreme leader] the full authority as a totalitarian ruler," Noorizade says. "And also we have elected the parliament, but the nominees are all selected by the Council of Guardians. Perhaps that was the reason Iran comes in 14th place."
The report also argues that the divide between best and worst democratic practices in the region has widened. The EIU says anti-government demonstrations in Lebanon suggest "growing democratic sentiment" in that country. And the group cites voting to choose a successor to the late Palestinian Authority President Yasser Arafat, along with elections in Iraq -- both in January.
Butter is optimistic about Iraq, where he says the U.S.-led attempt to install a stable and democratic system still has a long way to go. But he says the existence of such a system could offer what he calls "encouragement" for other states considering reforms.
Noorizade agrees. He says the recent Iraqi elections provided the most positive example in the region thus far.
"I believe the Iraqi example is an example that should be followed by others," he says. "There was no Council of Guardians to prevent thousands of people nominated for the election. In Iraq, nobody asks you about your religion when you nominate yourself. That is why we consider the Iraqi election as the best one which has happened in the Middle East up till now."
Butter says he is hopeful about the region's democratic future in light of recent events.
"The changes which are coming are between those which are forced by crises, and those which are in a sense organic," Butter says. "I think that we may well -- in maybe not one year's time but over five years' time -- see quite a different picture in the region. And, I think it has definitely to be hoped that a lot of that change would be more sustainable."
The Index of Political Freedom is part of a broader EIU report titled "The Dynamics of Democracy in the Middle East." Butter says he hopes analysts can rate Middle East states higher in the future, as repression gives way to increased democratic freedoms.