After giving up on winning victory in Afghanistan by military means, the international community is resorting to the centuries-old method of buying its way out.

In London this week, Hamid Karzai, the Afghan president, will launch a British and American-backed plan for "reintegration" of the Taliban and call for international funding to offer jobs and bribes to bring insurgents in from the cold.

The conference, which starts on Thursday, will be the first big international gathering on Afghanistan since President Obama announced his military strategy last month, including a surge of 30,000 American troops.

The aim was to accompany the surge with a new political strategy and ways for the Afghans to provide their own security by setting up local militias, which could include former Taliban.

With intelligence reports warning that Taliban influence is spreading, both aims now appear in jeopardy.

Divisions between civilian and military officials have led to a reported suspension of the militia programme, while Karzai’s newly appointed cabinet is regarded by many as even more corrupt than his last. Failure to offer effective government is seen as a critical factor in growing Taliban influence.

In Wardak, a province bordering Kabul, the risks of adopting American tactics are clear. Over the past two years, Karzai’s government has gradually lost control of the province to the Taliban.

Most local religious leaders are now bankrolled by the insurgents but one, Mullah Azizul Rahman Sediqi, known as "Super Mullah", pledged his full support for a U.S.-sponsored plan to arm militiamen so they could fight back.

He has since lived in constant fear of assassination. First the Taliban planted a bomb inside the mullah’s mosque. He removed the crude device and took it to a nearby field to detonate. Days later the Taliban fired mortars at his home, blowing out the windows.

Some believe the creation of militia forces in areas where the Afghan police force, army and Nato troops are too thinly spread — or too unpopular to maintain control — could be a critical part of handing over control of security to Afghans.

The first government-sponsored local militia in Wardak was set up last March in Jalez district and has doubled in size in the past 10 months to a force of more than 350.

Its commander, Mohammed Ali, claims his men, a ragtag bunch of lightly armed villagers aged from 17 to 50, have recaptured most of the villages in the district, pushing the Taliban into the barren mountains that surround it.

But despite repeated assurances of improved security, it was not possible to travel to the district last week without an armed escort.

"The Taliban still use the mountains to fire grenades at our convoys," Ali explained with a toothless grin as he squatted in one of his mud-hut checkpoints on the road into Jalez. "They lay IEDs [improvised explosive devices] on the route into the district and ambush us."

Hopes that Karzai would boost the prospects for security by cleaning up his administration were set back by the announcement of his new cabinet. Ten of his 17 nominees were rejected by parliament this month.

"I don’t think it’s a weaker government but it’s not as strong as it could have been," David Miliband, the foreign secretary, said in Washington last week. However, he insisted: "The alternatives to this very, very difficult project in which we’re engaged are worse."

Many people were disappointed with a government they regarded as weaker, according to Barmak Pazhwak, Afghan officer for the U.S. Institute of Peace. "It’s more corrupt and more full of local power groups who Karzai did deals with to get elected," he said.

Miliband insists the international community can exert leverage by withholding funds from ministries that don’t perform.

But the West’s toothlessness was highlighted by Karzai’s failure to take any action against his half-brother, Ahmed Wali, widely regarded as one of the biggest drug lords in southern Afghanistan.

In a gloomy prognosis for 2010, Major General Michael Flynn, the most senior allied intelligence officer in Afghanistan, has warned that the Taliban have tightened their grip on the civilian population and believe they have only to keep on blowing up soldiers to achieve victory.

Last Monday, the Taliban showed their ability to penetrate the capital with a series of attacks that killed 20 and injured 70, leaving a shopping centre in flames.

Click here for the full report from the London Times