Victims of the September 11 atrocities in the US, and Afghan villagers killed during the ousting of the Taleban regime, were casualties of conflict fuelled by a global climate of fear, Dr Mahathir said.
"We fear cardboard boxes. We fear white powder. We fear shoes. We fear metal cutlery," Dr Mahathir said.
Citizens in states accused of harbouring terrorists, meanwhile, feared sanctions, starvation and military action.
"We are in the middle of the Third World War. Both sides are convinced that their side is right, that theirs is the fight against evil," he added.
"It's going to be a long war because hatred, anger, bitterness rule our hearts."