The period following the collapse of Dr. Najibullah´s government in April 1992 witnessed a subtle transformation in the fault-line of conflict: from one centering exclusively on ideology to a shift, almost subliminal, towards ethnicity. The grave challenge of managing an array of actors and aspirations, given the country´s ethnic diversity has been acknowledged, but that has not translated into institutional structures put in place post 2001. The basic argument of the paper is that federal institutional arrangements hold a credible potential to prevent conflict from becoming intractable. Foremost, federal arrangements help address one of the root causes of the conflict, namely: actual or perceived denial of access to political and economic capital on the basis of ethnicity. Fears of federalism opening the way to secession, interference and manipulation by foreign powers seem misplaced. In fact it can help correct both the fact and perceptions of denial-deprivation that inform secessionist discourses. Institutionalised social-cultural autonomy would make local political structures and actors more accountable. Federal institutions could over a period of time modulate and help transform the Afghan conflict towards social reconciliation and a peace that would be meaningful and enduring.