Hamid Karzai's (search) inauguration as Afghanistan's first popularly elected president opens a new chapter in the battle to rescue this impoverished country, which became a haven for international terrorism and now risks turning into a narco-state.

Karzai is to be sworn in Tuesday in the capital's war-scarred former royal palace in front of 150 foreign guests, including Vice President Dick Cheney (search), the highest-ranking American official to visit Afghanistan since a triumphant-looking Karzai has been issued, and Tuesday's proceedings will be shown live on national television — rickety power supplies permitting.

Fearful of attacks by Taliban or Al Qaeda militants, Afghan and international forces have launched their biggest security operation since the Oct. 9 presidential election that gave Karzai a landslide victory.

Police have sealed off the 21/2-mile route from Kabul's airport to the palace, NATO armored vehicles have taken up position throughout the city, and U.S. helicopters have been patrolling the surrounding mountains.

"I'm sure that the terrorist elements would like to disrupt that, but I also think we've got the highest level of security here in Kabul and in the key parts of the country related to the inauguration that we've ever had," said Lt. Gen. David Barno, the top U.S. commander in Afghanistan.

The installation of the U.S.-backed Karzai is the culmination of a three-year drive to transform Afghanistan from a training ground for Al Qaeda extremists into a moderate Islamic republic.

Under Karzai's interim leadership, Afghans have adopted a new constitution labeled by the United States as the most progressive in the region and held their first Western-style vote, despite militant attacks that killed at least 15 election workers.

Some 3 million Afghan refugees displaced by more than two decades of warfare have returned home, and women and girls are back in jobs and schools from which they were barred under the previous regime. The economy also shows signs of recovery.

But Karzai faces daunting challenges during a five-year term likely to determine whether billions of dollars spent maintaining foreign troops here and on painstaking relief and development programs have been in vain.

Insurgents continue to harass U.S. and Afghan forces across a broad swath of the south and east. American officials expect to keep their force strength at about 18,000 at least until after parliamentary elections slated for the spring.

However, Karzai has said the country's booming drug economy, which now accounts for an estimated one-third of national income, is now a bigger threat than the insurgents and will be the top priority for the coming years.

"We are confident that we will continue to work with President Karzai and support him, particularly in his campaign to eradicate drugs," Bill Rammell, the leader of the British delegation to the inauguration, said after watching police burn seven tons of seized heroin, opium and hashish in Kabul on Monday.

U.N. surveys show cultivation of opium poppy in Afghanistan, from which most of the world's heroin is refined, jumped more than 60 percent this year, and warn that the corrupting power of drug smuggling mafias are taking an iron grip on the country.

In a show of urgency, Karzai has called hundreds of elders from around the country to meet Thursday in Kabul with U.S. and British officials honing plans to destroy poppy fields and refining labs, arrest traffickers and wean farmers off the lucrative crop.

He has also pledged to unveil a new Cabinet shorn of ineffective ministers who owed their place in the post-Taliban government to their control of militarized factions and who many Afghans and foreign observers view as warlords with no place in government.

Some Western diplomats say this is key to invigorating the government and tackling the drug problem — and to keeping the confidence of the international community on which Afghanistan remains chronically dependent.

"I'm sure the president realizes the aspirations of his people and his supporters," said Francesc Vendrell, the European Union's Special Representative to Afghanistan. Foreign donors' long-term support "should not be taken for granted."