PUTRAJAYA, Malaysia (CNN) -- Malaysian Prime Minister Dr. Mahathir Mohamad has urged Muslims to unite against Jews who, he says, rule the world by "proxy."

Opening the Organization of the Islamic Conference (OIC), a 57-nation summit in Malaysia on Thursday, the veteran leader also took aim at Islam, blaming a shift towards theological interpretations of the Koran that shunned science and development.

In his speech at Putrajaya, Malaysia's new administrative capital, the outgoing leader named Israel as "the enemy allied with most powerful nations."

Mahathir, who steps down at the end of the month, has become notorious for his controversial speeches during his 22 years as leader and has been a key proponent of a unified political stance among Muslim nations.

In his blistering attack at the summit, Mahathir said Jews ruled the world and got others to fight and die for them, but added that they would not be able to defeat the world's 1.3 billion Muslims.

"We are actually very strong, 1.3 billion people cannot be simply wiped out. The Europeans killed six million Jews out of 12 million. But today the Jews rule the world by proxy. They get others to fight and die for them," he said.

Mahathir has often hit out at Israel and the U.S., which he blames for fueling violence and angst in the Arab and Muslim world.

Malaysia, a moderate mostly Muslim nation, has long been a critic of Israel's occupation of Palestinian territories.

Under Mahathir's leadership it has also opposed the U.S. policy in the Middle East, including the backing of the Jewish state and the recent war in Iraq.

During the 1997-98 Asian financial crisis he railed against what he said was a western capitalist conspiracy to keep developing nations like Malaysia under control.

In his speech to the OIC -- the biggest gathering of Muslim leaders since the September 11, 2001, attacks in the U.S. -- Mahathir described the current situation as one of Islam's lowest points in history and highlighted the growing gap between the West and the Muslim world.

He called on Muslims to emulate the Jewish response to oppression, arguing the Jewish people had "survived 2,000 years of pogroms not by hitting back, but by thinking."

He said: "They invented socialism, communism, human rights and democracy, so that persecuting them would appear to be wrong, so that they can enjoy equal rights with others.

"With these they have gained control of the most powerful countries and they, this tiny community, have become a world power."

"We cannot fight them through brawn alone, we must use our brains also."

Mahathir said for too long Muslims had mistakenly believed Islam rejected new technology and progress.

Such interpretations, combined with the accusation that Islam promoted terrorism, were the major reasons all Muslim people were suffering "oppression and humiliation," he added.

"Islam is not just for the seventh century AD. Times have changed. Whether we like it or not we have to change," Mahathir said. "Not our teaching ... Islam is not wrong, but the interpretations by our scholars can be wrong."

Mahathir suggested new tactics for Muslims to vent their anger and frustration.

"Is there no other way than to ask our young people to blow themselves up and kill people and invite the massacre of more of our own people?" he asked.

"It cannot be that there is no other way ... we must not antagonize everyone. We must win their hearts and minds."

The OIC -- formed in 1969 to support the Palestinians -- must act on a unified front, Mahathir said, and use its political, economic and demographic clout to reverse 50 years of "bitter defeat."

"The Koran tells us that when the enemy sues for peace we must react positively. True the treaty offered to us is not favorable. But we can negotiate. The Prophet did," he added.

"And in the end he triumphed."

U.N. Secretary General Kofi Annan, who pulled out of the summit due to Security Council negotiations over a U.S. resolution on Iraq, said he understood "feelings of humiliation, anger and fear" among Muslims, but condemned suicide bombings as detrimental to the Islamic cause.

"These acts of terrorism, abhorred and rejected by all of you, defile and damage even the most legitimate cause," he said in his written speech, delivered at the summit by special representative of the secretary general to Afghanistan, Lakhdar Brahimi.

"They must be condemned, and must be stopped."

-- CNN Correspondent Maria Ressa contributed to this report.