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Under the terms of a deal brokered by US Secretary of State John Kerry, the runner-up in the vote was to name a "chief executive" in a national unity government conceived to keep the lid on political tensions.
Abdullah Abdullah was runner-up in the official election results. Mohammad Mohaqeq, one of Abdullah's vice presidential running mates, told Reuters the two sides could not agree on the powers of the chief executive, accusing the camp of election winner Ashraf Ghani of hardening its position.
"The talks collapsed two days ago. The political process is now at a stalemate, we don't see any way out," Mohaqeq, a leader of the minority Hazara community, said in an interview in Kabul, as a months-long power struggle to succeed President Hamid Karzai showed no signs of a resolution.
The breakdown in negotiations on a political deal comes days after Abdullah's team walked out of a U.N. audit of votes from a June 2 run-off ballot, saying it was dissatisfied with the way that fraudulent votes were being handled.
Together, the two failures have left the US-mediated deal in tatters and deepened the uncertainty about when President Hamid Karzai can hand over power to a successor.
Karzai had earlier planned Tuesday as the inauguration day for the new president, in time for him to attend a NATO summit in Wales two days later. But that was pushed back after the United Nations said it would be able to complete the audit only by around Sept. 10.
Karzai is not going to quit power without the completion of the process, a spokesman said.
"The President is not considering the step down before the official transfer of power to the new Afghan President. It is unconstitutional to step down before officially transferring the power to his successor," Aimal Faizi said in a statement.
The deadlock comes as the United States, Kabul's biggest aid donor, and other NATO nations withdraw their troops after nearly 13 years of fighting Taliban insurgents.
FEARS OF ETHNIC CONFLICT
Officials and diplomats fear it could trigger conflict along ethnic lines, on top of the insurgency.
"Announcing the results based on fraudulent means endangers the whole process and takes the country deeper into crisis. It is in no one's interest. It will divide Afghanistan," Mohaqeq said.
Ghani, a former finance minister and World Bank economist, is a member of Afghanistan's biggest ethnic group, the Pashtuns, who make up of most of the population in the south and east.
Abdullah is part Pashtun and part ethnic Tajik, but draws most of his support from Tajiks, the Hazaras and other smaller ethnic groups, largely in the centre and north.
Under the terms of the deal agreed during Kerry's visit in July, the chief executive would share control with the president over some key decisions, such as nominating the heads of the Afghan security forces.
But it was left to the two campaigns to work out the specifics of power-sharing.
Ghani has said the language of the document signed during Kerry's visit was ambiguous and it was up to the two teams to work out the details. His spokesman Tahir Zaheer dismissed the Abdullah campaign's demands as unconstitutional.
Chaos in Afghanistan as Western forces pull out would be a political blow for those countries which have spent billions of dollars and lost about 3,500 soldiers in a bid to bring peace and stability after Taliban rule.