The roads are a shambles. The power fails every few minutes. Open sewers fill the air with a fetid stench. Huge swathes of the city lie in bombed-out ruin.

But a year after the liberation of Kabul a sign of normalcy and hope has sprouted from the rubble. It is a brand-new gym.

"Lots of young people come," says Bawar Hotak, manager of the seven-month-old Olympia Gold Gym, a crowded and noisy workout space near a new fast-food outlet and a half-dozen computer training centres in the middle-class Kabul district of Microrayan.

"The guys exercise with such joy. I just wish I had enough equipment and money to open up a separate club for women."

It is a measure of how far this central Asian country of 26 million people has come that a gym marked by a huge painting of a shirtless muscle man, thumping with Hindi techno music and catering to Afghan yuppies would have been laughed off as a sick joke just a year ago when the Taleban controlled the country.

The religious fanatics were ousted from the capital a year ago today by a combination of United States bombs, Northern Alliance ground forces and political pressures on their Pakistani patrons.

"Politically and socially there has been a transformation in the past year that no-one anticipated," said Abdul Rasool Saeid, a professor of journalism and communication at the University of Kabul. "There has been a great transformation on the cultural and political level. People are publishing again. They are speaking freely."

With the Taleban vanquished and al-Qaeda scattered, the greatest challenge for the transitional government of President Hamid Karzai and his backers in the international community is now economic. They must deliver the goods and rebuild the infrastructure before the nation slips back into warlordism and despair.

"All of our attention and energy is put into how we can restore normal and healthy economic activity in the country," said Sardar Mohammad Waqebin, an adviser to Mr Karzai.

"People's biggest worries are economic. Yes, there have been economic changes. People are working and conducting business. But there is still not the safety to inspire people to really start investing."

Afghanistan's problems are deep and numerous. It remains a dishearteningly poor country with an average income of less than US$500 (HK$3,900) a year. More than two-thirds of the population is illiterate. The nation's communications, irrigation and transport networks have been obliterated by war and neglect.

The US-backed Karzai regime has nowhere near the money it needs. It has not launched a single labour-intensive, high-profile reconstruction project.

The US and others have pledged US$4.5 billion in aid over five years - only about half of what the World Bank estimates will be needed. However, only half of the money pledged for this year has arrived, most spent to bring refugees home.

In the provinces, warlords prevail. Mr Karzai's team continues to wrestle military commanders who refuse to obey orders to step down, to stop in-fighting and pillaging public funds.

In the west, warlord Ismail Khan has set up a kingdom, which Human Rights Watch last week denounced as rife with "arbitrary and politically motivated arrests, intimidation, extortion and torture, as well as serious violations of the rights to free expression and association".

In the north, violence between factions in and around Mazar-e-Sharif continues. Ethnic Pashtuns, accused of backing the Pashtun-dominated Taleban, continue to suffer reprisals.

"Many of the ethnic Pashtun families cannot go back to their villages in the north for the time being," said Maki Shinohara, Kabul spokeswoman for the UN High Commissioner for Refugees.

"In some provinces or districts in the north we are seeing Pashtun families forced out of their villages. It's a big problem."

But the south - populated largely by the Pashtuns who resent the Tajik-dominated Kabul administration - remains the most vexing region. Three months ago Mr Karzai - himself an ethnic Pashtun - narrowly escaped an assassination attempt in Kandahar, the Taleban's former stronghold. Mr Karzai ordered the chief of security in Kandahar to step down. He refused the order.

Afghan women, who suffered at the hands of both the ultra-conservative Taleban and the Islamic fundamentalist warlords who governed Afghanistan before them, continue to face discrimination. In Wardak province, four girls' schools were destroyed by fire recently. And one of the country's few women judges was forced to resign because she appeared without covering her head on TV in the US. But in the past year, new signs of hope and progress have appeared on both the economic and social fronts. In the bazaars and in the cities, all observers agree fewer women are wearing the all-covering burqas made mandatory by the Taleban, who arrested women who appeared in public without male relatives.

Even compared with six months ago, women appear to be taking a more active role in public life. Women now constitute almost a third of students at University of Kabul.

Even foreign investors, lured by the prospect of big money somewhere in the future, have arrived.

"Afghanistan is not one of the few places, but probably the only place in the world where opportunities are everywhere," said Towfiq Bahri, a Beirut-based representative of a group of Arab investors in Kabul on his third business trip this year. "They have nothing. They have to build everything from zero. And I mean everything - services, infrastructure, economy, banking. You name it, they don't have it. I think the country is one big land of opportunity."

Economic issues aside, Afghans say they have become happier and more hopeful over the past year. Intellectuals have re-emerged from the darkness of the Taleban era.

Barry Salaam, managing editor of Good Morning Afghanistan, a popular new radio programme, said that if the international community provided security and help with rebuilding infrastructure, ordinary Afghans would do the rest. Mr Salaam recently passed by a kindergarten in his neighbourhood. He remembered that particular kindergarten. The Taleban had used it as a jail. He himself had been held there overnight on two separate occasions on charges of trimming his beard.

But on this day he saw that the kindergarten had been rebuilt, repainted and re-populated with children. "I nearly came to tears," he said.