London-based International Institute for Strategic Studies (IISS), is the world's leading think tank for military affairs. It represents the top echelon of defence experts, retired officers and senior military men, spanning the globe from the United States and Britain to China, Russia and India.

I've been an IISS member for over 20 years. IISS's reports are always authoritative but usually cautious and diplomatic, sometimes dull. However, two weeks ago the IISS issued an explosive report on Afghanistan that is shaking Washington and its Nato allies.

The report, presided over by the former deputy director of Britain's foreign intelligence agency, MI-6, says the threat from al-Qaeda and Taliban has been "exaggerated" by the western powers. The US-led mission in Afghanistan has "ballooned" out of all proportion from its original aim of disrupting and defeating al-Qaeda. The US-led war in Afghanistan, says IISS, using uncharacteristically blunt language, is "a long-drawn-out disaster".

Just recently, CIA chief Leon Panetta admitted there were no more than 50 members of Al Qaeda in Afghanistan. Yet US President Barack Obama has tripled the number of US soldiers there to 120,000 to fight Al Qaeda.

The IISS report goes on to acknowledge the presence of western troops in Afghanistan is actually fuelling national resistance. I saw the same phenomena during the 1980's Soviet occupation of Afghanistan.

Interestingly, the portion of the report overseen by the former MI-6 Secret Intelligence Service deputy chief, Nigel Inskster, finds little Al Qaeda threat elsewhere, notably in Somalia and Yemen. Yet Washington is beefing up its attacks on both turbulent nations.

Abandoning its usual discretion, IISS said it was issuing these warnings because the deepening war in Afghanistan was threatening the west's security interests by distracting its leaders from the world financial crisis and Iran, and burning through scarce funds needed elsewhere.

The IISS's findings are a direct challenge to Obama, Britain's new prime minister, David Cameron, and other US allies with troops in Afghanistan. This report undermines their rational used to sustain the increasingly unpopular conflict. It will certainly convince sceptics that the real reason for occupation of Afghanistan has to do with oil, excluding China from the region, and keeping watch on nuclear-armed Pakistan.

The report also goes on to propose an exit strategy from the Afghan War. Western occupation troops, IISS proposes, should be sharply reduced and confined to Kabul and northern Afghanistan, which is mostly ethnic Tajik and Uzbek.

Southern Afghanistan - Taliban country - should be vacated by Western forces and left alone. Taliban would be allowed to govern its own half of the nation until some sort of loose, decentralised federal system can be implemented. This was, in fact, pretty much the way Afghanistan operated before the 1979 Soviet invasion.

Meanwhile, the war in Afghanistan is turning against the increasingly wobbly western occupation forces. The US-installed Afghan leader, Hamid Karzai, openly prepares for direct peace talks with Taliban and its allies - in spite of intense opposition from the US, Britain and Canada.

Pro-government Afghan forces are increasingly demoralised. Only the Tajik and Uzbek militias, and Afghan Communist Party, both supported by India, Russia and Iran, want to keep fighting the Pashtun Taliban.

Taliban leader Mullah Omar last week proclaimed the western occupiers were rapidly losing the war. He may well be correct. Nothing is going right for the US-backed Kabul regime or its western defenders. Even the much-ballyhooed US offensive at Marjah, designed to smash Taliban resistance, was an embarrassing fiasco. Civilian casualties from US bombing continue to mount.

Europeans are fed up with the Afghan war. Polls report 60% of Americans think the war not worth fighting.

The IISS bombshell comes on the heels of the most dramatic part of the British Chilcot Inquiry into the origins of the invasion of Iraq. Baroness Manningham-Buller the former head of Britain's domestic security service, MI-5, testified that the Iraq War was generated by a farrago of lies and faked evidence from the Blair government. What we call "terrorism" is largely caused by the western invasions of Afghanistan and Iraq, she testified.

The truth about Iraq and Afghanistan is finally emerging.

Afghanistan may again prove to be "the graveyard of empires".