Afghan President Hamid Karzai on Sunday defended his decision to ban private security contractors from operating in public in Afghanistan, saying many of the organizations tasked with providing security are engaging in terrorist activities, working with "Mafia-like" organizations and "looting and stealing from the Afghan people."

Karzai also speculated that some groups may be acting as security contractors during the day and as terrorist groups "at nighttime."

Last week, Karzai gave security contractors working in Afghanistan four months to cease operations. In an interview with Christiane Amanpour on ABC's This Week, the Afghan president said the move was necessary because the for-profit contractors were destabilizing the country's fight against militants.

"We've decided to bring an end to the presence of these security companies who are running a parallel security structure to the Afghan government," Karzai said, "who are not only causing corruption in this country, but who are looting and stealing from the Afghan people, who are causing a lot of harassment to our civilians, who we don't know whether they are security companies in daytime and then some of them turn into terroristic groups at nighttime."

Karzai argued that security contractors "are wasting billions of dollars in resources and they are definitely an obstruction, an impediment in a most serious manner, to the growth of Afghanistan's security institutions, the police and army."

Karzai said there are 40,000 or 50,000 Afghans working for private security contractors who are earning better pay than the Afghan government can provide. "Why would an Afghan young man come to the police when he can get a job at a security firm, have leeway, without discipline -- so naturally our security forces will find it difficult to grow."

"I'm appealing to the US taxpayer not to allow their hard earned money to be wasted on groups that are not only providing lots of inconvenience to the Afghan people but are actually, God knows, in contract with Mafia-like groups and perhaps also funding militants, and insurgents and terrorists with those funds," he said.

Karzai's decision comes as the US is becoming increasingly reliant on private contractors to support the fight against the Taliban. Contractor employees now outnumber US troops in Afghanistan, and are seeing record rates of casualties.

Controversy over the role of contractors in Afghanistan has raged for some time. In March, it was alleged that a US Marine was killed by two contractors who were found with "copious amounts of opium."

And Karzai is not the only one who thinks contractors are undermining the mission in Afghanistan. A report from the Army Times last year made similar assertions.

"Ill-disciplined private security guards escorting supply convoys to coalition bases are wreaking havoc as they pass through western Kandahar province ... and undermining coalition efforts to bring a greater sense of security to the Afghan people, particularly because the locals associate the contractors with the coalition," the Times reported.

lt has also emerged that some contractors have been paying off the Taliban "to the tune of tens of millions of dollars" to keep militants from attacking supply lines, in an arrangement some have described as a "protection racket."

In April, Gen. Stanley McChrystal, who would soon take over as head of US forces in Afghanistan, said the US had too many contractors in the country.

"We have created in ourselves a dependency on contractors that is greater than it ought to be," McChrystal said.

"I think we've gone too far. I think that the use of contractors was done with good intentions so that we could limit the number of military. I think in some cases we thought it would save money. I think it doesn't save money."

The following video was broadcast on ABC's This Week, August 22, 2010.