Afghanistan 'faces cash-crunch'

War-ravaged Kabul: Reconstruction is in jeopardy

Afghan president Hamid Karzai is beginning a tour of the Arab Gulf states to appeal for more help in rebuilding his country's shattered economy.

They don't know from one day to the next whether they're going to have the money to keep going

US Treasury Secretary Paul O'Neill

He left Afghanistan on Friday to visit Saudi Arabia, Qatar and the United Arab Emirates.

Meanwhile, a meeting of 60 donor nations in Washington has heard that Afghanistan could soon run out of reconstruction funds unless donors pay what they have promised.

US Treasury Secretary Paul O'Neill told the gathering that Afghanistan needs $165m (£106m) to cover the cost of running the government over the next six months to March 2003.

More pledges than payments

"That is operations money to pay teachers, police and mine sweepers and construction people and they don't know from one day to the next whether they're going to have the money to keep going," he said.

US Secretary of State Colin Powell warned donor countries that the reconstruction of Afghanistan would fail "without our sustained assistance".

"I hope this meeting will lead to additional pledges from other governments," he said.

The Washington meeting is the biggest on Afghanistan since donors pledged $4.5bn in aid over five years at a conference in Japan at the start of the year.

Afghanistan's interim government has received only a fraction of that money so far, about half of the $1.8bn promised for this year.

Afghanistan is desperately poor after more than two decades of foreign occupation then civil war made worse by earthquakes and drought.

Gulf trade

In Saudi Arabia, the Afghan president will meet with King Fahd to discuss how to expand trade and economic links between the two countries, according to his aides.

The visit comes a few days after Afghanistan abolished export duties in the hope of boosting cross-border trade.

Saudi Arabia has pledged funds to rebuild roads between Afghanistan's main cities as part of a $250m project with the United States and Japan.

The US is lobbying for tough international action against Saddam Hussein's regime in Iraq and knows that people in the Gulf states may be scrutinising the rebuilding of Afghanistan to assess US calls for "regime change" in Iraq.