NEW YORK - Charging that U.S. private security contractors are "mafia- like groups" being financed by U.S. taxpayers to carry out "terrorist activities" with the support of the U.S. government, Afghan President Hamid Karzai has ordered a four- month phaseout of all private security companies in his embattled country.

An Afghan bodyguard. Afghanistan's President Hamid Karzai has issued orders to immediately begin dismantling private security firms, which are believed to number around 40,000 and are extensively used to protect embassies and offices, guard bases and escort convoys. (AFP/File/Massoud Hossaini) Asserting his oft-challenged authority as the country's chief executive, Karzai's move, if implemented, would likely change the security landscape in Afghanistan. Critics are saying it would be likely to result in potential delays of many foreign projects and undermine the strategy being followed by top U.S. commanded in Afghanistan, Gen. David Petraeus.

Economic organisations such as the World Bank, and compounds of embassies, consulates, nongovernmental organisations, would be exempted from the rule.

But it appears clear that Karzai's hostility toward U.S. contractors is fuelled by their impact on domestic Afghan politics. Attacks by U.S. drones and other forces have resulted in the killing of innocent Afghanistan civilians.

This has not only turned into hostility by Afghans toward U.S. and allied troops, but it puts at peril the strategy announced by the new U.S. military commander in Afghanistan, Gen. David Petraeus. That strategy depends on the military courting Afghan civilians by protecting them from the Taliban and improving the government services they receive.

In a related development, Xe Services, the private military company formerly known as Blackwater Worldwide, has agreed with the U.S. State Department to pay 42 million dollars in fines for hundreds of violations of United States export control regulations, after allegedly illegally sending weapons to Afghanistan and training international civilians to be soldiers.

The latter charge includes making unauthorised proposals to train troops in south Sudan and providing sniper training for Taiwanese police officers.

The company is said to be pleased with the settlement, which will allow it to continue to get government contracts.

However, the settlement does not resolve other legal issues the company is facing. Five former Blackwater executives are under indictment executives on weapons and obstruction charges.

In a related development, the Iraqi government said it plans to seize weapons from foreign security firms and expel ex- Blackwater contractors still in the country, according to Interior Minister Jawad al-Bolani.

The decision was triggered by the Iraqi government's outrage over the dismissal by a U.S. court of charges against Blackwater Worldwide guards who were accused of killing 14 Iraqi civilians in Baghdad in 2007. The guards said they shot in self-defense.

The judge said there was evidence of prosecutorial misconduct. The U.S. government is appealing the dismissal of the court case. The Iraqi government, which has prohibited Blackwater from operating in Iraq, has hired U.S. lawyers to prepare a lawsuit against the company.

For many Iraqis, the killing of the 14 civilians became emblematic of the impunity from prosecution in Iraq enjoyed by foreign security contractors after the 2003 U.S. invasion. That immunity ended last year under a U.S.-Iraqi security agreement transferring sovereignty back to Iraq.

Karzai took the challenge to U.S. and NATO influence over his much-criticized government to the American airways over the weekend. During an appearance on ABC's "This Week," he pressed for the removal of the vast majority of U.S. private contractors by the end of this year. He said their continued presence inside Afghanistan was "an obstruction and impediment" to the country's growth, a waste of money, and a trigger for corruption among Afghan officials.

He added, "One of the reasons that I want them disbanded and removed by four months from now is exactly because their presence is preventing the growth and development of the Afghan security forces - especially the police force - because if 40, 50,000 people are given more salaries than the Afghan police, why would an Afghan ... man come to the police if he can get a job in a security firm, have a lot of leeway without any discipline? So naturally our security forces will find it difficult to grow. In order for our security forces to grow these groups must be disbanded."

Karzai's proposal drew cautious support from Senator John Kerry, Democrat of Massachusetts and chairman of the Senate Foreign Relations Committee, who was on a two-day visit to Afghanistan. Kerry said a reorganization of the country's security was called for.

"It is in (President Karzai's) interest to build his own security capacity as fast as possible," Kerry said, adding that it was also in the U.S.'s interest. However, he said, the timetable would need to be worked out.

But, according to U.S. officials, Afghanistan's army and police are not yet ready to take up the roles now played by private security contractors. If anything, the corruption that Karzai sees in the contractor corps could get worse if the Afghan army - itself a reported haven for corruption - is now asked to take on an even larger role.

Yet Karzai said, "I'm appealing to the U.S. taxpayer not to allow their hard earned money to be wasted on groups that are not only providing lots of inconvenience to the Afghan people but are actually, god knows, in contract with mafia- like groups and perhaps also funding militants, and insurgents and terrorists with those funds."