pompeo and ghani
© Reuters / Afghan Presidential Palace HandoutAfghanistan's President Ashraf Ghani (R) meets with US Secretary of State Mike Pompeo
Washington will cut aid to Afghanistan by $1 billion starting immediately, after failing to resolve a fierce dispute between rival Afghan leaders, the State Department said, noting the US military withdrawal would continue.

Lamenting the failure of Afghan leaders to agree on an "inclusive government," Pompeo said the feud between President Ashraf Ghani and Chief Executive Abdullah Abdullah had "harmed US-Afghan relations," adding that Washington would review cooperation with the country and make significant cuts to US aid.

"Because this leadership failure poses a direct threat to US national interests, effective immediately, the US government will initiate a review of the scope of our cooperation with Afghanistan," he said in a statement on Monday after an unannounced trip to Kabul.

While Ghani was named the victor of Afghanistan's presidential election in February, rival politician Abdullah Abdullah has contested the result, with both declaring themselves the country's legitimate leader. The electoral row came just as Washington inked a deal with the Taliban, agreeing to a "conditions-based" withdrawal from the country in exchange for a reduction in violence. But the dispute among Afghan leaders threatens to derail the deal, with the government refusing to follow through on a prisoner swap with the militant group set out in the agreement.

In an effort to salvage the deal and urge the Taliban to compromise on the prisoner swap, Pompeo also met with the group's chief negotiator Mullah Baradar at the al-Udeid Air Base in Doha later on Monday - the highest-level talks ever held between the US and the Taliban, according to the State Department. It remains unclear if any progress was achieved at the closed-door meeting, however.