The Kandahar provincial governor’s office said that Afghan and international forces are working together to find the missing convicts and re-arrest them. It said the troops have already caught 65 and killed two who tried to resist. Authorities have biometric data on each prisoner, which aids in their identification, the statement said.

But even if a sizable number of the convicts are recaptured, the already weak provincial government will likely continue to struggle to recover from the blow to its image.

Adding to the feelings of insecurity, the prison break came less than two weeks after the Kandahar police chief was killed by a suicide bomber inside his heavily defended office compound.

“How can we trust or rely on a government that can’t protect the police chief inside the police headquarters and can’t keep prisoners in the prison?” asked Islamullah Agha Bashir, who sells washing machines and other appliances in Kandahar city. “Last night while we were eating dinner I told my two sons not to go out as much because I am afraid that now when the morale of the Taliban is high, they will attack more.”

In Kabul, officials started to piece through the details of the escape and place blame. Justice Minister Abibullah Ghalab sent a formal letter to President Hamid Karzai acknowledging that prison officials or guards likely acted as accomplices but also saying that Afghan and international security forces should have detected the plot.

“The escape of all the prisoners from one tunnel … shows that collaborators inside the prison somehow provided an opportunity,” Ghalab said in the letter.

However, he also noted that Afghan police searched the compound from which the tunnel originated about two and a half months before the prison break and he said that Canadian and American forces have been responsible for security improvements to the prison. A full investigation was under way.

Kandahar city has been a major focus of the international troop surge over the past year, with NATO officials saying that establishing security there will be key to securing the region. Last summer, Afghan forces created a ring of checkpoints around the city and started pushing out into Taliban bed-down areas on its outskirts in a plan to establish the government’s authority before the rise in attacks that usually comes with warmer weather in the spring and summer.

The Taliban have responding by starting off the spring fighting season with a string of attacks apparently designed to undermine trust in the capabilities of the Afghan government. Within the past two weeks, Taliban agents have also launched deadly attacks from inside the Defense Ministry a shared Afghan-U.S. military base in eastern Laghman province.

The attacks have exposed weaknesses that have also thrown doubt on the readiness of the Afghan government to start taking over authority for security parts of the country as planned. Without that transition, it becomes more difficult for the country’s international allies to show an exit strategy that will start bringing their troops home.

NATO does continue to have tactical successes. The international coalition announced Tuesday that it had killed a key al-Qaida operative in Afghanistan in an airstrike.

NATO identified the man killed in the April 13 airstrike in Dangam district of eastern Kunar province as Abu Hafs al-Najdi, also known as Abdul Ghani. The alliance said he was a regional commander in charge of suicide bombings and cash flow. The strike also killed a number of other insurgents, including another al-Qaida leader known as Waqas.

But Afghans tend to focus on the continuing danger they face in their daily lives — either as government workers who may be targeted or just that they could be a bystander when a suicide bomb goes off.

In eastern Paktia province on Tuesday, the provincial governor narrowly escaped an apparent assassination attempt by insurgents. A roadside bomb exploded just behind a vehicle taking Gov. Juma Khan Hamdard to his office, said Rohallah Samon, a spokesman for the governor.

Hamdard was not hurt, but three policemen who were in a chase vehicle were slightly injured, Samon said.

Vogt reported from Kabul, Afghanistan.

 As details have trickled out of Kandahar in the past several hours, what seems most clear is that the escape was meticulously planned and carefully executed:

The inmates escaped from Sarposa prison through a more than 1,000 foot-long tunnel dug by insurgents during the last five months, Taliban spokesman Zabihullah Mujahid said, adding that the inmates planned the tunnel’s course to avoid police checkpoints and major roads. They literally undercut the prison’s main line of above-ground defense, including guard towers at each corner, concrete barriers and razor wire and multiple entry checkpoints.

The break’s orchestrators arrived in a prison cell at around 11 p.m. last night. Three prisoners with prior knowledge of the plot proceeded to unlock cells, waking up prisoners four or five at a time. Over the subsequent four-and-a-half hours, conspirators escorted the throngs of incarcerated back through the tunnel to vehicles stationed outside the prison walls. At least 476 prisoners, and possibly as many as 541, ultimately escaped. Authorities were unaware anything was amiss another four hours.

The same prison suffered similar — though much larger and more bloody — jail break in 2008, when armed insurgents bore down on the facility, killing 16 guards as they freed 1200 inmates. Last night’s escape, by contrast, was devoid of violence, though a “martyrdom-seeking-group near the prison” (in the words of a Taliban press statement) was prepared to set off explosive vests in the event that prison security discovered the escape in progress. 

The biggest remaining mystery is how the escape’s organizers obtained keys to prison cells. According to the Associated Press, one of the organizer’s claimed “he and his accomplices obtained copies of the keys for the cells ahead of time from “friends.” It’s suspected that the prisoners were aided by Afghan prison guards, “dozens” of whom are still unaccounted for nearly a day after the breach. 

According to Time: 

“There is no way such a large escape could have been pulled off without anyone noticing,” said a soldier monitoring the situation. The International Crisis Group in November said the Afghan justice system was “in a catastrophic state of disrepair” and that most Afghans see it as the most corrupt of the national institutions.

The diggers finally broke through to the prison cells around 11 p.m. Sunday night, and a handful of inmates who knew of the plan unlocked cells and ushered hundreds of inmates to freedom without a shot being fired.

A man who claimed he helped organize those inside the prison told The Associated Press in a phone call that he and his accomplices obtained copies of the keys for the cells ahead of time from “friends.” He did not say who those friends were, but his comments suggested possible collusion by prison guards.

“There were four or five of us who knew that our friends were digging a tunnel from the outside,” said Mohammad Abdullah, who said he had been in Sarposa prison for two years after being captured in nearby Zhari district with a stockpile of weapons. “Some of our friends helped us by providing copies of the keys. When the time came at night, we managed to open the doors for friends who were in other rooms.”

He said they woke the inmates up four or five at a time to sneak them out quietly. The AP reached Abdullah on a phone number supplied by a Taliban spokesman. His account could not be immediately verified.

The Taliban statement said it took four and a half hours for all the prisoners to clear the tunnel, with the final inmates emerging into the house about 3:30 a.m. They then used a number of vehicles to shuttle the escaped convicts to secure locations.

Government officials corroborated parts of the Taliban account. They confirmed the tunnel was dug from the nearby house and the prisoners had somehow gotten out of their locked cells and disappeared into the warm Kandahar night.

The city’s police mounted a massive search operation for the escaped convicts. They shot dead two inmates who tried to evade capture and re-arrested another 26, said Tooryalai Wesa, the provincial governor.

But there was no ignoring that the Taliban had pulled off a daring success under the noses of Afghan and NATO officials.

“This is a blow,” presidential spokesman Waheed Omar said. “A prison break of this magnitude of course points to a vulnerability.”

Between 2007 and 2010, the New Ansari Money Exchange used billions of dollars it transferred in and out of Afghanistan to conceal illicit narcotics proceeds, the U.S. Treasury Department said in a statement released in Washington. New Ansari transfers money to its Dubai subsidiaries — Green Leaf General Trading LLC and Al Adal Exchange — which then transfer money through U.S. and international financial systems, the statement said.

“Today’s designation is another important step in our ongoing efforts to target money laundering and narcotics trafficking activity in Afghanistan,” said Stuart Levey, undersecretary for terrorism and financial intelligence. “We will continue to work to expose the funding and support mechanisms for such illicit activity, and to take actions to safeguard the U.S. and Afghan financial sectors from abuse.”

The issue of corruption puts the U.S in a delicate situation because it doesn’t want to undermine the very Afghan government that it is trying to shore up so that foreign troops can leave the security of the nation to Afghan forces by the end of 2014.

The groups were sanctioned under the 1999 Foreign Narcotics Kingpin Designation Act. The act targets major foreign drug traffickers, their organizations and associates who act on their behalf. The law prohibits all trade and transactions between designated traffickers and U.S. companies and individuals, and freezes their assets within U.S. jurisdictions. The so-called Kingpin Act doesn’t target the countries in which the designated individuals and companies operate or the countries’ governments.

According to U.S. treasury officials, elements of the New Ansari network have laundered money for Azizullah Alizai and the Haji Juma Khan Organization, both identified as significant foreign narcotics traffickers by the United States in June 2007 and May 2009, respectively. Alizai is a major heroin trafficker and supplier in Southwest Asia and the Middle East while the Haji Juma Khan Organization is an international opium, morphine, and heroin trafficking organization based in the border regions of Iran, Pakistan and Afghanistan, the Treasury Department statement said.

The sanctions were issued after an investigation by U.S. Treasury Department officials, the U.S. Drug Enforcement Administration and the Afghan Threat Finance Cell, an interagency center that collects, analyzes and disseminates relevant financial intelligence on individuals and organizations involved in financing the insurgency in Afghanistan.

“The New Ansari network is yet another example of money launderers exploiting legitimate financial systems to launder their ill-gotten gains, including illicit drug proceeds, as part of their criminal enterprise,” said DEA Administrator Michele Leonhart.

“Cash is the ultimate commodity for these criminal networks, and these proceeds often fuel insurgent activity and corruption, while undermining the authority of developing governments.”

The sanctioned individuals include several who play key roles in the New Ansari Money Exchange, including exchange founder Abdullah Barakzai Ansari, manager Mohammad Khan, day-to-day operations manager Mohammad Jan, stakeholder and director Haji Noorullah, Afghan banker Mohammad Rafi Azimi and Mohammad Noor, the manager of New Ansari subsidiaries in Dubai.

Key cash couriers Eissa Jan Abdul Qayoum and Rahmatullah Mohammad Afzal were also sanctioned. Between December 2009 and January 2010, Afzal transferred $94 million from Afghanistan to Dubai for New Ansari, the U.S. Treasury Department said.

Also sanctioned were Ahmad Shah Hakimi and his business, Ahmad Shah Money Exchange, which was used by Hakimi to launder money for New Ansari after it was raided Afghan authorities in January 2010 in Kabul, the department said.

But district chief Abdul Wahid Omarkhel and the Kunduz governor’s spokesman, Mabobullah Sayedi, said the operation killed Maulvi Bahadar, who has been the Taliban’s acting shadow governor for Kunduz for several months. They said another four suspects had been arrested. The Taliban have set up so-called shadow governors in many provinces, claiming to be the legitimate authority in the area.

Afghan forces also conducted a separate overnight raid in two compounds in the neighboring province of Tahar, killing a Taliban district chief in a gunfight that also left an Afghan policeman and a border guard dead, said Gen. Shah Jahan Noori, provincial chief of police. Noori identified the slain insurgent as Sheikh Ahmadullah, who he said headed the Taliban in the Khwaja Bahawuddin district and was responsible for organizing roadside bombs and suicide attacks.

Also Friday, U.S. Homeland Security Secretary Janet Napolitano was in the Afghan capital to speak with the Homeland Security officers working with the Afghan government to secure the country’s porous borders from militants, as well as weapons and drug smugglers. She was to spend New Year’s Eve with U.S. troops and meet with Afghan and U.S. officials in Kabul before heading to Qatar, the U.S. Embassy said.

Meanwhile, Italian military authorities in Rome said an Italian soldier was shot dead while on guard duty at a base in Gulistan in the western province of Farah. NATO said another coalition service member was killed by a roadside bomb in southern Afghanistan. It did provide further details.

This year has been by far the deadliest for foreign troops in the nearly 10-year war. The latest two deaths brought the total in 2010 to 702 foreign troops killed, compared to 504 last year, previously the bloodiest of the war.

In an end-of-year review of the U.S. strategy in Afghanistan, the Obama administration cited advances in its push against the Taliban in southern Afghanistan, but acknowledged that while Taliban momentum has been stopped or reversed in some areas, “gains remain fragile and reversible.”

Despite gains, violence still pervades much of the south. On Friday, insurgents threw hand grenades into two homes in the Zhari district of Kandahar in the Taliban’s provincial heartland, killing a child and wounding six civilians, said Kandahar governor spokesman, Zelmai Ayubi.

Zhari, located just outside Kandahar city and the birthplace of the Taliban, was part of the focus of the U.S. surge of 30,000 troops earlier this year. U.S. forces advanced on the district several months ago as part of a crucial strategy aimed at reducing violence in the nearby city by stemming the flow of fighters and weapons.

In September 2006, a Canadian-led force pushed the Taliban out of Zhari and nearby Panjwai in an operation that cost 28 coalition lives. Months later, the Taliban were back.

In Wardak province west of Kabul, NATO said Friday that several insurgents and a child had been killed in fighting during a joint operation with Afghan forces targeting a Taliban logistics officer in a compound the previous day.

The joint force came under fire Thursday from the compound and fired back, killing several insurgents, it said in a statement, without specifying how many.

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Associated Press writers Amir Shah in Kabul and Mirwais Khan in Kandahar contributed.