Money is gushing out of Kabul Bank

One of the principal owners of the Afghan bank at the center of a financial crisis said depositors had withdrawn $180 million in the past two days. He predicted a "revolution" in the country's financial system unless the Afghan government and the United States moved quickly to help stabilize the bank.

Khalil Frozi, one of the two largest shareholders of Kabul Bank, said reports indicating that the institution had lost as much as $300 million were overstated. But he predicted that if Afghan depositors continued to withdraw their money at the current rate, then Kabul Bank would almost certainly collapse -- undermining confidence in the financial system Afghanistan has been trying to build with U.S. help.

"If people lose their trust in the banks, then we will have revolution in our financial system," Frozi said. "We need the Afghan government and the U.S. government to support us. That is essential."

In a news conference, President Hamid Karzai promised that the Afghan government, whose Central Bank has intervened, would guarantee deposits. "We've got enough cash to support the bank," he said. Separately, Mahmoud Karzai, the president's brother, suggested that the U.S. Treasury guarantee the funds of bank clients.

U.S. Defense Secretary Robert Gates, on an unannounced visit to Afghanistan following a trip to Iraq, said that while the fight against corruption must be led by Afghans, the United States is working on new ways to prevent millions of dollars in U.S. aid from underwriting bribery and graft.

Appearing at a news conference with Afghan President Hamid Karzai, Gates also repeated that President Obama's July 2011 deadline for starting the withdrawal of troops was flexible. But he added: "It is important to be honest about this. The United States is spending over $100 billion a year in this fight in Afghanistan. America's sons and daughters are being killed. The American people need to know that 15 years from now, we are not going to still be fighting this fight."

Gates was asked a question about civilian casualties in a NATO airstrike in northern Afghanistan that U.S. officials said targeted a senior member of the Islamic Movement of Uzbekistan, a group that has reemerged as an ally to the Taliban. But Karzai criticized the raid in a written statement as killing 10 election workers.

Gates, apparently unaware of Karzai's condemnation, said: "This is the first I had heard that civilians have been killed, and we certainly will look in to that."

Thousands of Shiite Muslims, thumping their chests and crying, attended funeral prayers for 35 victims of a triple bombing in the eastern Pakistani city of Lahore.

The blasts, which targeted a Shiite religious ceremony Wednesday, were the first major attacks since devastating flooding tore through the country over the past month.

The Pakistani Taliban claimed responsibility for the attacks in a phone call to an Associated Press reporter.

A member of the group, who did not give his name but has previously spoken on behalf of the militants, said it was in revenge for the alleged killings by Shiites of members of a Sunni extremist group.

NEWS SERVICES