Outspoken Malaysian Prime Minister Mahathir Mohamad said on Wednesday state terrorism was worse than that committed by individual groups and accused countries advocating democracy of terrorizing the world.

His comments in this central Java city came on the same day U.S. President Bush visited the Indonesian resort island of Bali for talks with Indonesian President Megawati Sukarnoputri and Muslim leaders in a bid to explain Washington's war on terror.

Malaysia's Prime Minister Mahathir Mohamad gestures as he delivers his speech after receiving Distinguish Fellow Award from the ASEAN Federation of Engineering Organizations in Yogyakarta, Indonesia, Wednesday, Oct. 22, 2003. Mahathir, a regular critic of the Western policies toward developing countries and Islamic nations, Wednesday accused the 'great exponents of democracy' of 'terrorizing the world' since the Sept. 11 attacks on the United States.  [AP]

Mahathir, who steps down at the end of this month after 22 years in power, has been making headlines in his final days in office with statements about his belief that Jews rule the world.

That subject didn't come up in a wide-ranging 30 minute speech here as he accepted an award from a regional engineering association, but the topic of terrorism did.

Mahathir said "terror attacks are not just by irregulars acting on their own."

"Indeed, we see states launching massive retaliation, not just to curb suspected terrorists, but his family, his home, his village and his town."

"It would be ridiculous to think that such attacks do not terrorize the innocent. In fact, the terrorism is even greater, for it is systematic and executed with heavy weapons in the hands of trained soldiers."

"It would seem that the great exponents and practitioners of democracy believe that the way to spread the doctrine and to break down resistance is by terrorizing the world."

The 78-year-old did not name the country or countries he had in mind, and declined to answer when asked later by a reporter, but he has been a frequent critic in the past of U.S., Australian and Israeli policies, among a number of others.

A recent remark by Mahathir that "Jews rule the world by proxy" brought widespread criticism, which Mahathir said only proved he was right.

"The reaction of the world shows that they control the world," he said earlier this week.

In his speech in this center of ancient Javanese culture and royalty in the world's most populous Muslim nation, Mahathir also attacked the World Trade Organization, whose avowed aim is to liberalize international trade.

"Like the World Bank and the IMF(International Monetary Fund), the WTO is now being made into yet another instrument to enrich the rich and impoverish the poor," he said.

In a later television interview in Yogyakarta, Mahathir said economic policies could in themselves be a form of terrorism, citing actions of international currency traders he said had hurt Asian economies and helped create poverty and violence.

"That is why I say that the economic terrorism is no different from other forms of terrorism, and we can see that happening," he said.

In the interview, he defended his policy over the years of speaking his mind and not hesitating to criticize major powers such as the United States.

"If we don't, and we just allow them to do what they like, then they will get away with the feeling that they are invincible, nobody can stop them and they will go on doing the wrong things."

Mahathir left Indonesia in the afternoon for a visit to East Timor with a government and business delegation aimed at strengthening bilateral relations and exploring technical cooperation and investment opportunities. From there he is scheduled to travel to Papua New Guinea.

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