Habibullah, Abdur Rahman's eldest son but child of a slave mother, kept a close watch on the palace intrigues revolving around his father's more distinguished wife (a granddaughter of Dost Mohammad), who sought the throne for her own son. Although made secure in his position as ruler by virtue of support from the army which was created by his father, Habibullah was not as domineering as Abdur Rahman. Consequently, the influence of religious leaders as well as that of Mahmoud Beg Tarzi, a cousin of the king, increased during his reign. Tarzi, a highly educated, well-traveled poet and journalist, founded an Afghan nationalist newspaper with Abdur Rahman's agreement, and until 1919 he used the newspaper as a platform for rebutting clerical criticism of Western-influenced changes in government and society, for espousing full Afghan independence, and for other reforms. Tarzi's passionate Afghan nationalism influenced a future generation of Asian reformers.

The boundary with Iran was firmly delineated in 1904, replacing the ambiguous line made by a British commission in 1872. Agreement could not be reached, however, on sharing the waters of the Helmand River.

Like all foreign policy developments of this period affecting Afghanistan, the conclusion of the "Great Game" between Russia and Britain occurred without the Afghan ruler's participation. The 1907 Anglo-Russian Convention (Entente) not only divided the region into separate areas of Russian and British influence but also established foundations for Afghan neutrality. The convention provided for Russian acquiescence that Afghanistan was now outside this sphere of influence, and for Russia to consult directly with Britain on matters relating to Russian-Afghan relations. Britain, for its part, would not occupy or annex Afghan territory, or interfere in Afghanistan's internal affairs.

During World War I, Afghanistan remained neutral despite pressure to support Turkey when its sultan proclaimed his nation's participation in what it considered a holy war. Habibullah did, however, entertain a Turco-German mission in Kabul in 1915. After much procrastination, he won an agreement from the Central Powers for a huge payment and arms provision in exchange for attacking British India. But the crafty Afghan ruler clearly viewed the war as an opportunity to play one side off against the other, for he also offered the British to resist a Central Powers from an attack on India in exchange for an end to British control of Afghan foreign policy.

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Source: U.S. Library of Congress