By DANIEL COONEY,Associated Press Writer

KABUL, Afghanistan -Insurgent violence wracks the countryside, but a building boom fueled by international aid, profits from the opium trade and foreign investment is remaking Afghanistan’s dusty capital. The city even got its first five-star hotel Tuesday.

Four years after the Taliban’s ouster, a shiny new office building rises amid Kabul’s traditional mud-colored buildings and there is a glitzy shopping mall boasting the country’s only escalators. A bright U.S. Embassy is nearly ready, and suburbs of new homes are springing up.

But this city of 4 million people is far from being a metropolis.

It has electricity for only a few hours a day. The vast majority of its residents are poor, living in single-room, mud-brick houses and drawing water from wells that are sometimes polluted with cholera.

Militants occasionally fire rockets into downtown and the threat of kidnapping forces many foreigners to live in tightly guarded compounds ringed by concrete bomb barriers and to travel in armored convoys.

Still, change is evident across the city as workers clear away the rubble of buildings and houses wrecked during a quarter century of war.

The Kabul Serena luxury hotel was one of the most high-profile projects and its opening drew President Hamid Karzai, ambassadors, foreign aid workers and others as well as the building’s sponsor, the Aga Khan, spiritual leader of 20 million Ismaili Muslims around the world.

The hotel is “an important milestone in Afghanistan’s reconstruction and its re-engagement with the world community,” said the Aga Khan, whose philanthropic organization, the Aga Khan Development Network, built and operates the hotel.

Its 177 rooms rent for $250-$1,200 a night – a fortune in a city where a government worker earns $50 a month. But the hotel also is providing jobs for 360 Afghans, 20 percent of whom are women, and the Aga Khan said it will help promote economic growth and international tourism.

“A five-star hotel in Kabul is aimed at helping the national economy … to accommodate a very large number of people who will have major impact on the economy,” he said. Without a top hotel, “they couldn’t stay in Kabul.”

With its large swimming pool, health club, pastry shop, two restaurants and neat mustard-colored exterior, the hotel contrasts sharply with its surroundings.

Crippled men compete with ragged street children on the pavement outside to beg for change from passing cars. About 300 yards away is the Murad Khani slum, where thousands live in flimsy shacks next to open sewers.

“A lot of money is going into the big construction projects like hotels and shopping malls, but not enough money is going into projects for the poor, like housing and services,” said Anna Cestari, an official with Habitat, the U.N. agency for urban development.

A short distance from the Serena, a new U.S. Embassy and an adjoining apartment building for its staff are getting the finishing touches, their yellow and orange paint scheme providing a bright scene in an otherwise drab neighborhood.

Since 2001, the mission has been operating mainly out of modified shipping containers, and staffers often have had to bunk together in small rooms and work in cramped offices.

The fancy shopping mall, the Kabul City Center, was an instant hit after it opened this year. Afghans throng there on weekends, gaping at the shiny escalators and elevators.

“I am amazed by these moving stairs,” said Ahmad Jan, a 23-year-old tailor visiting from the eastern town of Gardez. “I just had to see this building. It’s so beautiful.”

Indian aid paid to refurbish Habiba High School, which for the past half-century has taught many of Afghanistan’s leaders, including Karzai. The school was pummeled by artillery fire during fighting in the early 1990s.

Down the road, workmen are about to lay the foundation for a new parliament building.

Whole neighborhoods of new houses have sprouted. Many of the homes are owned by former warlords or others thought to be behind the country’s burgeoning trade in opium and heroin.

Despite the building boom, supply can’t keep up with demand as hundreds of foreign organizations need offices and homes for their employees. So rents are high – around $5,000 a month gets a normal house in Wazir Akbar Khan, one of the more upmarket suburbs.