I think everyone has it wrong. The reason the IOC doesn't want a minute of silence isn't because they are afraid of annoying Arab states - its because they are afraid of how the Arab athletes will react during the minute of silence. The IOC is afraid the athletes will begin talking/singing/walking out during the minute of silence - and that this will be interpreted as "supporting terror". Immediately people will start calling for those athletes to be thrown out of the Olympics.
How would the Olympics look if a large portion of the Arab athletes had to leave?