Not necessarily so; quite a few countries have gotten rid of dictators, kings, etc and moved forward. Doesn't happen overnight, but it happens... and what's the alternative? Some foreign deus ex machina coming in and "installing" democracy?
Deterrence is achieved by the certainty of overwhelming retaliation. Whether or not to "let them" develop weapons is not really an issue, as there is no effective and acceptable way of stopping them. The US is not in a position to tell other countries what they are and are not allowed to do within their borders.
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