The Afghan President Hamid Karzai has been in London for a meeting with the Prime Minister.

The two men discussed a new constitution for Afghanistan, as well as efforts to eradicate heroin production in the country - a process with which the British have been trying to help.

We caught up with the Afghan President in his hotel suite at Claridges. Jeremy Paxman began the interview by asking how much foreign aid Afghanistan felt it needed.

HAMID KARZAI:
(President of Agfhanistan)
Well, our estimate of foreign aid for Afghanistan for the next five years or so is from $15 to 20 billion, in order to enable Afghanistan to do very well economically, and to be able to complete the job that we have on terrorism, and to create a sustainable economy in Afghanistan.

JEREMY PAXMAN:
Can you explain to us why British people should pay their taxes, in order that they can contribute to that?

HAMID KARZAI:
It's not only the question of the Afghan people. Contribution to Afghanistan's economy and the wellbeing of the Afghan people, and the reconstruction of Afghanistan, is a contribution to peace and security all over the world, primarily, the people in Europe and America. Because if we don't do that, the alternative, unfortunately, for the Afghan people, will be to continue to depend on poppy, and the growth of drugs. That, in turn, will grow in the economy in Afghanistan, cause terrorism to benefit, and also bring addiction and the drug use to Europe and England, let alone the question of terrorism. It's in the direct interests of the people in the UK to help Afghanistan do well, so that people in the rest of the world can do well as well.

JEREMY PAXMAN:
You raised the question of drugs. The British offered to take on drug policy in your country. Isn't the fact of the matter that the British policy seems to have failed in Afghanistan. According to the UN, opium production has actually increased?

HAMID KARZAI:
That's not the correct estimate.

JEREMY PAXMAN:
They are UN figures.

HAMID KARZAI:
Well, we have a dispute on that. We have eradicated poppy cultivation in four provinces. Our success rate in the eradication goes somewhere between 30 to 60%. We will continue the eradication of poppies in other provinces as well. But it's a complex problem. Eradication alone does not answer the question of drug production and trafficking of it around the world. We have to address the question of poverty, and alternative crops and alternative livelihoods as well, alongside the eradication, to be able to have results. It's in that context as well that we are asking for increased funding to help Afghanistan achieve all that.

JEREMY PAXMAN:
But you are still the world's largest supplier of opium, aren't you?

HAMID KARZAI:
Unfortunately that's the case right now. We should reduce it to nothing.

JEREMY PAXMAN:
On the question of terrorism, it has been reported by some people that the Taliban are making a comeback in Afghanistan. Is that how you read it?

HAMID KARZAI:
That's not how I read it at all. The Taliban and their terrorist associates are defeated completely in Afghanistan. They were the sole movement there. They are finished, they are gone. They are in hiding. Will a defeated person in hiding be able to regroup? No. If you are referring to the activities that they have as individuals in groups of two or three people, or one person committing acts of terrorism, that is not a challenge. We continue to follow them, and we will keep chasing them until they are completely over. Only yesterday, you might have heard, we had a major operation on the border region, between us and Afghanistan, where a number of terrorists were arrested and killed.

JEREMY PAXMAN:
But isn't the fact of the matter, Mr Karzai, that your authority doesn't extend anything like across the whole of Afghanistan. In fact, it doesn't extend even across the whole of the Kabul area.

HAMID KARZAI:
That's a presumption that floats around in newspapers and the media. It's a problem of analysis and facts. The policy of the Afghan government, politically, is only present all over the country. It's very, very real and present. Whether that political authority has administrative capabilities, the provision of services to the country as a whole, is something that we have to improve upon. We are politically strong and present, and legitimate, all over Afghanistan. Do we provide services to the people? Is there a capable administration? No. Do we have to improve on that? Yes, a lot.

JEREMY PAXMAN:
You can't move around the country with any security, can you?

HAMID KARZAI:
No. I was in Razni just ten days ago, which is a province to the west of Kabul. I was near Pakistan about 25 days ago. I was there mixing with people and enjoying myself like hell.

JEREMY PAXMAN:
What do you imagine the people of Afghanistan would make of the fact that you're staying at Claridges?

HAMID KARZAI:
Well, they would be very happy to find that I was staying in a good hotel here in the UK, and that the Government of the UK is very hospitable.

This transcript was produced from the teletext subtitles that are generated live for Newsnight. It has been checked against the programme as broadcast, however Newsnight can accept no responsibility for any factual inaccuracies. We will be happy to correct serious errors.