The Afghan central government's limited writ and widespread official corruption are helping sustain a Taliban insurgency, and have fed pessimism about the Afghanistan stabilization effort. President Hamid Karzai is working with U.S. and international donors on how to improve governance and delivery of public services, and on winning re-election in presidential elections slated for August 20, 2009. Many agree that the country has made substantial progress on personal and political freedoms since the fall of the Taliban regime. Over the past year U.S. officials have been shifting away from reliance on building the central government and toward promoting local governing bodies and security initiatives as a complement to efforts to build central government capabilities. The United States will increase economic development efforts, and develop benchmarks with which to judge the performance and legitimacy of the Afghan government, including its efforts to curb official corruption.

This report provides current statistical information, profiles the Afghanistan narcotics trade's participants, explores linkages between narcotics, insecurity, and corruption, and reviews U.S. and international policy responses since late 2001. The report also considers ongoing policy debates regarding the counternarcotics role of coalition military forces, poppy eradication, alternative livelihoods, and funding issues for Congress.

Afghanistan’s stabilization appears to be gathering strength, about three years after the U.S.-led war that brought the current government to power. Successful presidential elections held on October 9, 2004 appear to be accelerating political and economic reconstruction, and the insurgency led by remnants of the former Taliban regime has been diminishing significantly. Since the defeat of the Taliban, Afghanistan no longer serves as a safe base of operations for Al Qaeda. Remaining obstacles to stability include the continued local authority of militias controlled by regional leaders and growing narcotics trafficking. U.S. stabilization measures focus on strengthening the central government and its security forces. This report discusses U.S. efforts in Afghanistan at length, as well as the efforts of other countries around the world and the costs of U.S. aid to Afghanistan.

The United States and its allies are helping Afghanistan emerging from more than 22 years of warfare, although substantial risk to Afghan stability remains. Before the U.S. military campaign against the orthodox Islamist Taliban movement began on October 7, 2001, Afghanistan had been mired in conflict since the Soviet invasion of Afghanistan in 1979. The defeat of the Taliban has enabled the United States and its coalition partners to send forces throughout Afghanistan to search for Taliban and Al Qaeda fighters and leaders that remain at large, including Osama bin Laden. As the war against remaining Al Qaeda and Taliban elements winds down, the United States is shifting its military focus toward stabilizing the interim government, including training a new Afghan national army, and supporting the international security force (ISAF) that is helping the new government provide security.

Increasing militant activity in western Pakistan poses three key national security threats: an increased potential for major attacks against the United States itself; a growing threat to Pakistani stability; and a hindrance of U.S. efforts to stabilize Afghanistan. This report addresses this issue at length. It also describes the recent upsurge of militant activity on the Pakistani side of the Pakistan-Afghanistan border, as well as the general political climates of Pakistan and Afghanistan and their relationships with the United States.