Iran's embattled President addressed the annual gathering of the world's great and good in the Swiss resort of Davos, calling for "genuine dialogue".
Mr Khatami's address was one of the highlights of the day
Mohammad Khatami said true world security could only come through peace based on compassion and friendship.
His comments came after UK Foreign Secretary Jack Straw backed the US-led decision to go to war in Iraq.
Earlier 200 people staged a protest at Zurich airport, trying to hamper access to this week's World Economic Forum.
Mr Khatami said in his speech: "Military might may perhaps bring transient security, but the gap between this type of security is the difference between a security based on armed peace and peace based on compassion and friendship toward humanity."
And he said Iran had never tried to acquire weapons of mass destruction, nor had it imported nuclear material from North Korea or elsewhere.
After the official meeting, where he made veiled references to George W Bush, Mr Khatami told the media that the US President's Middle East actions "had failed to have any success".
US Vice-President Dick Cheney and Mr Khatami will not meet at Davos
"He attacked Afghanistan - where is Bin Laden now? and has the threat of al-Qaeda gone?
"The US invaded Iraq to destroy weapons of mass destruction - where are those weapons? The public was deceived by the US."
He continued: "In Iraq, Ayatollah Sistani asks for direct and democratic elections, but the occupiers, who say they came to bring democracy, block the elections."
Mr Khatami said he would not be seeking dialogue with US Vice-President Dick Cheney in Davos this week as he did not sense the US had "respect" for Iran.
However he said he was sure Iran would have fair and free democratic elections. There have been concerns conservative forces in the country may prevent this.
Mr Khatami's presence should keep those at the World Economic Forum (WEF) focused on security, not least in next-door Iraq.
But the imbalances in the world economy, globalisation, and the rapid slide of the dollar will also be high on the agenda.
And former US president Bill Clinton called on Wednesday for political and economic leaders to agree on a "systematic" approach to the world problems such as poverty, disease and security.
Speaking at a forum event he said: "The world is not organised systematically to deal with the fact that we are globally interdependent, whether it's Aids or conflicts
The conference's main attraction will be the speech by Mr Cheney on Saturday.
Despite a late withdrawal by Paul Bremer, the US consul in Baghdad, Iraq is top of the agenda at the five-day forum that has brought together more than 2,200 of the world's political and business elite.
In an address before the forum's official opening, UK Foreign Secretary Jack Straw said he did not accept that the war in Iraq had drained resources from the war on terror.
Mr Straw said the war had helped to make the region much more stable and that he had never claimed there was any link between Iraq and al-Qaeda, but that Iraq had given tangible support to what he called some of the "horrible rejectionist groups" operating against Israel.
Another participant at Davos is Libyan Prime Minister Shukri Ghanem, the first Libyan to appear at the forum in more than 20 years, following the country's move to abandon nuclear, biological and chemical weapons late last year.
Unusually heavy snow falls have blanketed the Davos valley under nearly two metres of snow and slowed down trains and especially cars.
The WEF's get-together is held every year at Davos - the only exception being 2002's move to New York to show solidarity following the attacks on the World Trade Center the previous year.
This year the five-day meeting has attracted participants from 94 countries.
However despite the high-powered economic and political talk, any participant event caught wearing a tie is obliged to contribute five Swiss francs (£2.20) to the United Nations Children's Fund (Unicef).
There has been a snowy start to the forum
The Davos theme, "Partnering for Prosperity and Security", reflects the two key concerns, whether in the formal seminars and group discussions or the equally significant informal networking.
Naturally, the aftermath of 2003's Iraq war - not least the US's plans to hasten the handback of sovereignty to an Iraqi government by June this year - and the tension it engendered is top of the list of things to discuss.
But other tensions are occupying minds too.
Trade ministers are likely to get together to see if there is a way to restart stalled world trade talks.
The other big economic issue is the continuing decline of the dollar, strengthening the US economy at - some say - the expense of a stuttering Europe and Japan.
One of the sessions in Davos will discuss "what if the dollar fell by an additional 20%", although none of the government officials is scheduled to speak at the event.
Protests in store
Critics of the WEF, however, argue that the Davos get-together cannot not provide a solution to the world's dilemmas as most of its participants are part of the problem.
More than 100,000 people have come to Bombay, attending the World Social Forum, which was set up to rival the WEF.
They have drafted resolutions against US policy in Iraq and elsewhere, and lambasted organisations like the World Bank and International Monetary Fund, which they describe as "an efficient tool to prevent any local social or economic development".
Christine Gent of Oxfam told delegates that "to overcome poverty we must have free international trade rules; at the moment the rules are not fair".
Back in Davos, police have imposed strict security around the conference centre.
Anti-globalisation activists have already clashed with police in several cities across Switzerland.
In Davos, protests are expected over the weekend.