The US is cutting $1bn (£0.86bn) in aid to Afghanistan and threatening further reductions in co-operation, Secretary of State Mike Pompeo has said.
Mr Pompeo announced the cut following a trip to the Afghan capital, Kabul, where he failed to break a deadlock between two politicians who both claim victory in the presidential election.
He hoped to save a deal signed between the Taliban militant group and the US.
The agreement is supposed to pave the way to peace in Afghanistan.
However, the political disunity in Kabul has hampered efforts to create a negotiating team and the talks with the Taliban - a key part of the agreement signed late last month - have yet to begin.
Since the US intervened in 2001 to dislodge the Taliban, tens of thousands of people have been killed in Afghanistan, including an estimated 32,000 civilians.
The US and its Nato allies have now agreed to withdraw all troops within 14 months - if the Taliban abide by the deal.
What is blocking the peace process?
A political row over between Ashraf Ghani - who has served as president since 2014 - and his rival, Abdullah Abdullah, who served as the country’s chief executive in the last administration.
Both stood as candidates in the presidential election last September, with Mr Ghani officially declared the winner in February 2020 - a result challenged by Mr Abdullah.
Both men have since claimed victory and held rival inaugurations earlier this moseenth.
Mr Pompeo visited Kabul in an effort to end the stand-off, and held separate meetings with the rivals.
He said the failure to form an “inclusive government” dishonoured those who had lost their lives in the Afghan conflict.
The US secretary of state was unusually harsh in his condemnation of the two men’s failure to work together.
He said they were acting inconsistently with commitments made in connection with the peace agreement, and that their failure posed a direct threat to US national interests.
In addition to the $1bn cut this year, the US was prepared to cut its assistance in 2021 by the same amount and was conducting “a review of all of our programs and projects to identify additional reductions, and reconsider our pledges to future donor conferences for Afghanistan”, Mr Pompeo said.
However he added that if the two sides reached a resolution, the sanction would be revisited.
How is the peace process meant to unfold?
The next step was supposed to be a prisoner swap. Under the US-Taliban agreement, some 5,000 Taliban prisoners were supposed to be freed by the Afghan authorities, in return for 1,000 government troops.
It was supposed to show trust between the two sides ahead of talks.
But Mr Gahni said he had not agreed to this, instead offering the conditional release of 1,500 prisoners. The Taliban have not agreed to this.
According to Tolo News, Mr Pompio said he had “pressed” the rival presidents on this.
The secretary of state also said the Taliban were honouring their commitments to stop attacking US targets, and the American troop withdrawal would proceed in accordance with the agreement.
He did not address the fact that the Taliban have continued to attack Afghan soldiers, but he said there had been a reduction in violence, and stressed that the US would continue to defend and support the Afghan National Security forces.
Nearly 3,500 members of the international coalition forces have died since the 2001 invasion, more than 2,300 of them America
America has started withdrawing its troops after agreeing to reduce their number from about 12,000 to 8,600 within 135 days of signing the agreement with the Taliban on 29 February.