Kabul, Afghanistan ? President Hamid Karzai took the helm Tuesday of a country whose revival is threatened by a surging opium trade and a persistent Taliban insurgency, pledging to bring stability and prosperity to Afghanistan even as rebels staged attacks near the Pakistani border.

With the speeches over and foreign dignitaries departing his solemn swearing-in ceremony, the affable Karzai begins a challenging five-year term under pressure to heal ethnic divisions and repair the war-ravaged nation’s decrepit infrastructure.

Wearing his trademark green robe and lambskin hat and with his right hand on a copy of Islam’s holy book, the Quran, Karzai appeared jittery as he repeated an oath of allegiance read to him by the white-bearded chief justice, Fazl Hadi Shinwari.

But he recovered his poise in a confident speech before 600 guests who included Vice President Dick Cheney and Defense Secretary Donald Rumsfeld, outlining his agenda to meet Afghans’ sky-high expectations.

He singled out America — which still has 18,000 soldiers in Afghanistan and is providing billions of dollars in aid — for particular thanks, while underlining the continued need for international support.

“Our fight against terrorism is not yet over,” he said, warning of a deadly nexus between extremists and drug traffickers. “A decisive victory over terrorism requires serious and continuous cooperation at regional and international levels.”

Critics say the security focus on having elections and the search for Osama bin Laden have diverted energy from rebuilding Afghanistan’s institutions and clearing the country of weapons to weaken the power of warlords and lessen the danger of ethnic tensions once foreign forces leave.

Afghan President Hamid Karzai, left, shakes hands with Afghan Supreme Court Chief Justice Fazl Hadi Shinwari as he is sworn in as Afghanistan's first popularly elected president. The ceremony was Tuesday in Kabul's presidential palace.

Karzai’s aides insist no warlords will be in his new Cabinet, which is to be announced within the next week.