MUSCAT Prime Minister Dr Mahathir Mohamad denounced what he termed as "debt slavery" under the International Monetary Fund and pleaded the cause of Islamic banking, in an interview published Saturday.

"The International Monetary Fund has no say in Malaysia," Mahathir told the Times of Oman newspaper.

"If the Muslim world carefully manages its money, it will have (a) clear ... effect on the wealth of Muslim countries and as a consequence the dependency on rich countries will be considerably lessened."

Mathathir said that although slavery has been outlawed universally the curse of debt slavery still torments poor nations.

Islamic banking could solve the debt crisis, the prime minister said, noting that it involved risk being shared by the lender and the borrower.

"We all know the international community is not about to adopt Islamic banking," Mahathir added.

Share losses

"They are not going to lend if they cannot gain control over their borrowing to recover their loans, irrespective of the miseries that might cause."

Islamic banks have to share losses incurred by an entrepreneur, he said. "This arrangement enhances the long-term commitment to work together ... as business partners."

The daily ran a first interview with Mahathir on Tuesday in which he warned that if the United States invades Iraq it would create a flow of fresh terrorist recruits. AFP