However, the competition between foreign demands and domestic political IOUs was on display in the palace hall, where 800 invited guests attended Karzai's inauguration ceremony.

On one side of the cavernous room sat Secretary of State Hillary Clinton, who's warned that the international community is losing patience with Karzai.

On the other side was Abdul Rashid Dostum, the Afghan warlord who's become a symbol of cronyism and government corruption. Dostum was stripped of his top military post after he was accused of war crimes and investigated for enacting vigilante justice on the streets of Kabul.

Although foreign leaders have demanded that Karzai sideline Dostum and other discredited political allies, the Afghan president is also under pressure to reward those, such as Dostum, who helped him win re-election.

Several leading political reformers are refusing to work with Karzai, and the president may have to rely on questionable allies who alienate Afghan citizens and the foreign governments that have spent billions and lost hundreds of troops defending Afghanistan from Taliban extremists.

"You can't bring democracy with butchers," said Wadir Safi, a political science professor at Kabul University. "You cannot bring democracy with war criminals."

Before returning to Washington, Clinton sidestepped a direct question about the role of Afghan warlords in Karzai's new government by saying that the Obama administration expects to see "an effective government that respects the rights of the people."

"The road ahead is fraught with challenges and imperfect choices," Clinton said at the U.S. Embassy. "Setbacks are inevitable, and we have to be realistic about what we can accomplish, but we are also clear-eyed about the stakes."

The push for political reform comes at a decisive time in the Obama administration's fierce debate over whether the U.S. should send more troops to Afghanistan, and if so, how many.

Army Gen. Stanley McChrystal, America's top military commander in Afghanistan, has warned that the U.S. could lose the war within a year unless Obama sends a massive new counterinsurgency force to protect civilians and train Afghan forces to take over.

U.S. Ambassador Karl Eikenberry, himself a retired general, has warned Obama that the military campaign could be undercut unless Karzai cleans up his government.

In his address, Karzai said he'd like to see trained Afghan forces in charge of security within five years.

"I want Afghanistan to become a country that is capable of defending itself, and where peace reigns across the whole nation," Karzai told an audience that included Pakistani President Asif Ali Zardari and British Foreign Minister David Miliband.

Karzai's resistance to outside pressure has soured his relations with international allies.

"There's limited patience now," said one Western diplomat in Kabul, who spoke only on the condition of anonymity in order to talk candidly about Karzai. "This is really the 'Last Chance Saloon' for Karzai, and we'll see in the coming weeks or months if he is serious about the pledges he has made."

Relations have especially strained by the fraud-tainted vote in August that led to Karzai's re-election.

Karzai eventually acceded to U.S. pressure to accept a runoff because of widespread voter fraud in the first round. However, the second-place finisher, former Foreign Minister Abdullah Abdullah, decided to drop out of the runoff after the Afghan president refused to overhaul the voting process.

In his half-hour address Thursday, Karzai delivered a few polite jabs at his critics.

He suggested that news reports have exaggerated the corruption in Afghanistan, and he vowed to press American leaders to do more to reduce NATO bombings that kill civilians.

The swearing-in ceremony took place amid extraordinary security measures across Kabul to prevent Taliban or al Qaida forces from attacking.

Kabul's traffic-clogged streets were nearly deserted as security forces cordoned off large swaths of the city around the presidential palace. Afghanistan declared Thursday a national holiday and urged residents to stay at home.

While the heavy security prevented any attacks in Kabul, insurgents staged two attacks in other parts of Afghanistan that killed 12 people.

Authorities said a suicide bomber attacked a convoy of Afghan security forces, killing 10 in southern Uruzgan province. A second suicide bomber hit American forces in the adjacent Zabul province, killing two U.S. soldiers.

The attacks contributed to the somber reception Karzai received from Afghan voters.

Yar Mohammed watched Karzai's speech on a television in the small, two-aisle grocery store that he's owned for decades. He voted for Karzai five years ago in Afghanistan's first democratic election, but he refused to support the president this time.

"Karzai is not reliable. He's worthless," said Mohammed, who blamed the president for failing to bring any measure of stability to Afghanistan in his first term. "It's useless to test someone who has already tested."

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