KUALA LUMPUR, June 1, Reuter - The inaugural summit of the Group of 15 developing nations harshly criticised Western liberal democrats on Friday and asked rich nations to consider writing off some third world debt.

"There is a fear that democracy has become the kind of religion that communism became," Malaysian Prime Minister Mahathir Mohamad said in the opening address to the summit, designed to bring poor countries closer together.

"For the liberal democrats (of the West) chaos, instability and retarded economic growth with the accompanying massive and debilitating poverty among their democratic converts are small price to pay for the liberalism of democracy," he told eight heads of government and seven senior ministers.

The leaders of Argentina, India, Indonesia, Malaysia, Senegal, Venezuela, Yugoslavia and Zimbabwe are attending the June 1-3 summit as well as senior ministers from Algeria, Brazil, Egypt, Jamaica, Mexico, Nigeria and Peru.

Mahathir said the new group, which includes governments at both ends of the political spectrum, should abandon its search for a common ideology and work instead to strengthen ties by trading with one another,

"Politics and its related military postures are no longer as important. Economic matters now dominate...Ideologies should no longer occupy our time," he said.

By relying on the markets of rich nations, poorer countries were handing pressure groups and non-governmental organisations of the West a stick to beat them with.

"By threatening the exports of developing countries they can exert a powerful influence to foist their democratic norms on others. In fact, it amounts to imperialism," Mahathir said.

A powerful U.S. labour group has filed a petition to remove trade privileges from Malaysia for abusing workers' rights.

Mahathir also said that Eastern European countries, in the turmoil of change, should put political stability above democracy for its own sake.

"Merely being democratic will not save them from the poverty created by their former centrally planned economies...the people will have to restrain their exercise of democratic freedom if they are to benefit from democracy," Mahathir said.

The member nations of the G-15 account for about half of the 1.3 trillion dollars the third world owes, mostly to developed countries.

The spectre of debt is likely to loom over the talks, delegates say, and Mahathir said Western creditors must be prepared to accept the risks of lending. "And if all else fails, to accept losses".

"Bankrupts can die, nations cannot. We cannot make debt-slaves of nations, not in this so-called enlightened age," he said.

He stressed that the G-15 did not want to lock horns with developed nations. "I wish to stress here, lest our gathering be misunderstood by others, that we are not...conspirators against the north."

Senegal President Abdou Diouf and former Tanzanian President Julius Nyerere, who is attending the meeting as chairman of the South Commission research group, both urged the G-15 in their speeches to act and not just talk.

The South Commision is expected to publish a key report on economic problems among developing nations on August 2, aspects of which will be discussed at G-15 meeting.

The group will also discuss projects to encourage trade and private sector investment among developing countries.