By DEXTER FILKINS, MARK MAZZETTI and JAMES RISEN
http://www.nytimes.com/2009/10/28/world/asia/28intel.html?_r=1&ref=global-home

KABUL, Afghanistan — Ahmed Wali Karzai, the brother of the Afghan president and a suspected player in the country’s booming illegal opium trade, gets regular payments from the Central Intelligence Agency, and has for much of the past eight years, according to current and former American officials.

The agency pays Mr. Karzai for a variety of services, including helping to recruit an Afghan paramilitary force that operates at the C.I.A.’s direction in and around the southern city of Kandahar, Mr. Karzai’s home.

The financial ties and close working relationship between the intelligence agency and Mr. Karzai raise significant questions about America’s war strategy, which is currently under review at the White House.

The ties to Mr. Karzai have created deep divisions within the Obama administration. The critics say the ties complicate America’s increasingly tense relationship with President Hamid Karzai, who has struggled to build sustained popularity among Afghans and has long been portrayed by the Taliban as an American puppet. The C.I.A.’s practices also suggest that the United States is not doing everything in its power to stamp out the lucrative Afghan drug trade, a major source of revenue for the Taliban.

More broadly, some American officials argue that the reliance on Ahmed Wali Karzai, the most powerful figure in a large area of southern Afghanistan where the Taliban insurgency is strongest, undermines the American push to develop an effective central government that can maintain law and order and eventually allow the United States to withdraw.

“If we are going to conduct a population-centric strategy in Afghanistan, and we are perceived as backing thugs, then we are just undermining ourselves,” said Maj. Gen. Michael T. Flynn, the senior American military intelligence official in Afghanistan.

Ahmed Wali Karzai said in an interview that he cooperated with American civilian and military officials, but did not engage in the drug trade and did not receive payments from the C.I.A.

The relationship between Mr. Karzai and the C.I.A. is wide ranging, several American officials said. He helps the C.I.A. operate a paramilitary group, the Kandahar Strike Force, that is used for raids against suspected insurgents and terrorists. On at least one occasion, the strike force has been accused of mounting an unauthorized operation against an official of the Afghan government, the officials said.

Mr. Karzai is also paid for allowing the C.I.A. and American Special Operations troops to rent a large compound outside the city — the former home of Mullah Mohammed Omar, the Taliban’s founder. The same compound is also the base of the Kandahar Strike Force. “He’s our landlord,” a senior American official said, speaking on the condition of anonymity.

Mr. Karzai also helps the C.I.A. communicate with and sometimes meet with Afghans loyal to the Taliban. Mr. Karzai’s role as a go-between between the Americans and the Taliban is now regarded as valuable by those who support working with Mr. Karzai, as the Obama administration is placing a greater focus on encouraging Taliban leaders to change sides.

A C.I.A. spokesman declined to comment for this article.

“No intelligence organization worth the name would ever entertain these kind of allegations,” said Paul Gimigliano, the spokesman.

Some American officials said that the allegations of Mr. Karzai’s role in the drug trade were not conclusive.

“There’s no proof of Ahmed Wali Karzai’s involvement in drug trafficking, certainly nothing that would stand up in court,” said one American official familiar with the intelligence. “And you can’t ignore what the Afghan government has done for American counterterrorism efforts.”

At the start of the Afghan war, just after the 9/11 terrorist attacks in the United States, American officials paid warlords with questionable backgrounds to help topple the Taliban and maintain order with relatively few American troops committed to fight in the country. But as the Taliban has become resurgent and the war has intensified, Americans have increasingly viewed a strong and credible central government as crucial to turning back the Taliban’s advances.

Now, with more American lives on the line, the relationship with Mr. Karzai is setting off anger and frustration among American military officers and other officials in the Obama administration. They say that Mr. Karzai’s suspected role in the drug trade, as well as what they describe as the mafialike way that he lords over southern Afghanistan, makes him a malevolent force.

These military and political officials say the evidence, though largely circumstantial, suggests strongly that Mr. Karzai has enriched himself by helping the illegal trade in poppy and opium to flourish. The assessment of these military and senior officials in the Obama administration dovetails with that of senior officials in the Bush administration.

“Hundreds of millions of dollars in drug money are flowing through the southern region, and nothing happens in southern Afghanistan without the regional leadership knowing about it,” a senior American military officer in Kabul said. Like most of the officials in this article, he spoke on the condition of anonymity because of the secrecy of the information.

“If it looks like a duck, and it quacks like a duck, it’s probably a duck,” the American officer said of Mr. Karzai. “Our assumption is that he’s benefiting from the drug trade.”

American officials say that Afghanistan’s opium trade, the largest in the world, directly threatens the stability of the Afghan state, by providing a large percentage of the money the Taliban needs for its operations, and also by corrupting Afghan public officials to help the trade flourish.

The Obama administration has repeatedly vowed to crack down on the drug lords who are believed to permeate the highest levels of President Karzai’s administration. They have pressed him to move his brother out of southern Afghanistan, but he has so far refused to do so.

Other Western officials pointed to evidence that Ahmed Wali Karzai orchestrated the manufacture of hundreds of thousands of phony ballots for his brother’s re-election effort in August. He is also believed to have been responsible for setting up dozens of so-called ghost polling stations — existing only on paper — that were used to manufacture tens of thousands of phony ballots.

“The only way to clean up Chicago is to get rid of Capone,” General Flynn said.

In the interview in which he denied a role in the drug trade or taking money from the C.I.A., Ahmed Wali Karzai said he received regular payments from his brother, the president, for “expenses,” but said he did not know where the money came from. He has, among other things, introduced Americans to insurgents considering changing sides. And he has given the Americans intelligence, he said. But he said he was not compensated for that assistance.

“I don’t know anyone under the name of the C.I.A.,” Mr. Karzai said. “I have never received any money from any organization. I help, definitely. I help other Americans wherever I can. This is my duty as an Afghan.”

Mr. Karzai acknowledged that the C.I.A. and Special Operations troops stayed at Mullah Omar’s old compound. And he acknowledged that the Kandahar Strike Force was based there. But he said he had no involvement with them.

A former C.I.A. officer with experience in Afghanistan said the agency relied heavily on Ahmed Wali Karzai, and often based covert operatives at compounds he owned. Any connections Mr. Karzai might have had to the drug trade mattered little to C.I.A. officers focused on counterterrorism missions, the officer said.

“Virtually every significant Afghan figure has had brushes with the drug trade,” he said. “If you are looking for Mother Teresa, she doesn’t live in Afghanistan.”

The debate over Ahmed Wali Karzai, which began when President Obama took office in January, intensified in June, when the C.I.A.’s local paramilitary group, the Kandahar Strike Force, shot and killed Kandahar’s provincial police chief, Matiullah Qati, in a still-unexplained shootout at the office of a local prosecutor.

The circumstances surrounding Mr. Qati’s death remain shrouded in mystery. It is unclear, for instance, if any agency operatives were present — but officials say the firefight broke out when Mr. Qati tried to block the strike force from freeing the brother of a task force member who was being held in custody.

“Matiullah was in the wrong place at the wrong time,” Mr. Karzai said in the interview.

Counternarcotics officials have repeatedly expressed frustration over the unwillingness of senior policy makers in Washington to take action against Mr. Karzai — or even begin a serious investigation of the allegations against him. In fact, they say that while other Afghans accused of drug involvement are investigated and singled out for raids or even rendition to the United States, Mr. Karzai has seemed immune from similar scrutiny.

For years, first the Bush administration and then the Obama administration have said that the Taliban benefits from the drug trade, and the United States military has recently expanded its target list to include drug traffickers with ties to the insurgency. The military has generated a list of 50 top drug traffickers tied to the Taliban who can now be killed or captured.

Senior Afghan investigators say they know plenty about Mr. Karzai’s involvement in the drug business. In an interview in Kabul this year, a top former Afghan Interior Ministry official familiar with Afghan counternarcotics operations said that a major source of Mr. Karzai’s influence over the drug trade was his control over key bridges crossing the Helmand River on the route between the opium growing regions of Helmand Province and Kandahar.

The former Interior Ministry official said that Mr. Karzai was able to charge huge fees to drug traffickers to allow their drug-laden trucks to cross the bridges.

But the former officials said it was impossible for Afghan counternarcotics officials to investigate Mr. Karzai. “This government has become a factory for the production of Talibs because of corruption and injustice,” the former official said.

Some American counternarcotics officials have said they believe that Mr. Karzai has expanded his influence over the drug trade, thanks in part to American efforts to single out other drug lords.

In debriefing notes from Drug Enforcement Administration interviews in 2006 of Afghan informants obtained by The New York Times, one key informant said that Ahmed Wali Karzai had benefited from the American operation that lured Hajji Bashir Noorzai, a major Afghan drug lord during the time that the Taliban ruled Afghanistan, to New York in 2005. Mr. Noorzai was convicted on drug and conspiracy charges in New York in 2008, and was sentenced to life in prison this year.

Habibullah Jan, a local military commander and later a member of Parliament from Kandahar, told the D.E.A. in 2006 that Mr. Karzai had teamed with Haji Juma Khan to take over a portion of the Noorzai drug business after Mr. Noorzai’s arrest.