This article investigates the challenges currently facing Afghanistan. It argues that 'post-conflict' peace and reconstruction in Afghanistan may depend on a dramatic expansion of institutionalized economic interdependence: this will not necessarily require obeisance to standard international policy paradigms and it will have to draw on existing patterns of interdependence, even though many of these are rooted in brutally exploitative war economy conditions. The authors argue further that neither peace nor economic development will hold without a centralized, credible and effective state, that the emergence of such a state is a political problem more than a technical problem, and that it will depend on a monopolization of force by the state. Such developments cannot be envisaged without policy being based on a close reading of the long and decidedly non-linear, conflictual experiences in state formation and failure in Afghanistan, a history whose patterns and implications are summarized in this article.