- Associated Press - Monday, October 25, 2010

KABUL, Afghanistan (AP) — Afghan President Hamid Karzai said Monday that once or twice a year, Iran gives his office $700,000 to $975,000 for official presidential expenses and that Washington also provides “bags of money” because his office lacks funds.

Mr. Karzai’s comments come a day after the New York Times reported that Iran was giving bags of cash to the president’s chief of staff, Umar Daudzai, to buy his loyalty and promote Iranian interests in Afghanistan.

The Times quoted unnamed sources as saying the cash amounted to a slush fund that Mr. Karzai and Mr. Daudzai had used to pay Afghan lawmakers, tribal elders — and even Taliban commanders — to secure their loyalty.

Mr. Karzai told reporters Monday that he had instructed Mr. Daudzai, a former ambassador to Iran, to accept the money from Tehran.

“It is official and by my order,” Mr. Karzai said.

He added that several nations have given money to his office — the first being the United Arab Emirates, which provided $1.5 million nine years ago when Afghanistan’s interim government was formed.

“That was a big help and we submitted all the money to the central bank and we were paying for the daily expenses of the government,” Mr. Karzai said. “After that, a number of other countries helped us in the same way.”

Mr. Karzai did not offer details about how the money was spent, saying only that it was used to “help the presidential office” and to “dispense assistance” to certain individuals.

“This is transparent. This is something that I’ve even discussed while I was at Camp David with President Bush,” he said, referring to meetings he had with former President George W. Bush at the U.S. presidential retreat outside Washington.

“It is not hidden,” he said. “We are grateful for the Iranians’ help in this regard. The United States is doing the same thing. They are providing cash to some of our offices.”

Asked whether the U.S. actually gives bags full of cash to the presidential office, Mr. Karzai responded: “Yes, it does give bags of money.”

The Associated Press requested comment from the U.S. Embassy, but has not yet received a response.

The Iranian Embassy in Afghanistan dismissed the allegations that the Iranian government was making cash payments to Mr. Daudzai, calling them “ridiculous and insulting.” The statement was issued earlier Monday, before Mr. Karzai’s comments.

In Washington, Pentagon press secretary Geoff Morrell said he was not surprised that Mr. Karzai’s office was receiving money from Iran, which he said was playing a destabilizing role in Afghanistan.

“I think Iran in Afghanistan — much as it has been in Iraq — has been walking both sides of the street for years,” Mr. Morrell told MSNBC. “On one hand, as this report indicates, clearly trying to curry favor with the government while at the same time on the other hand, training, arming, financing, directing anti-government forces.”

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