WASHINGTON — After 10 months of secret dialogue with Afghanistan's Taliban insurgents, senior U.S. officials say the talks have reached a critical juncture and they will soon know whether a breakthrough is possible, leading to peace talks whose ultimate goal is to end the Afghan war.

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As part of the accelerating, high-stakes diplomacy, Reuters has learned, the United States is considering the transfer of an unspecified number of Taliban prisoners from the Guantanamo Bay military prison into Afghan government custody.

It has asked representatives of the Taliban to match that confidence-building measure with some of their own. Those could include a denunciation of international terrorism and a public willingness to enter formal political talks with the government headed by Afghan President Hamid Karzai.

The officials acknowledged that the Afghanistan diplomacy, which has reached a delicate stage in recent weeks, remains a long shot. Among the complications: U.S. troops are drawing down and will be mostly gone by the end of 2014, potentially reducing the incentive for the Taliban to negotiate.

Still, the senior officials, all of whom insisted on anonymity to share new details of the mostly secret effort, suggested it has been a much larger piece of President Barack Obama's Afghanistan policy than is publicly known.

U.S. officials have held about half a dozen meetings with their insurgent contacts, mostly in Germany and Doha with representatives of Mullah Omar, leader of the Taliban's Quetta Shura, the officials said.

The stakes in the diplomatic effort could not be higher. Failure would likely condemn Afghanistan to continued conflict, perhaps even civil war, after NATO troops finish turning security over to Karzai's weak government by the end of 2014.

Success would mean a political end to the war and the possibility that parts of the Taliban - some hardliners seem likely to reject the talks - could be reconciled.

The effort is now at a pivot point.

"We imagine that we're on the edge of passing into the next phase. Which is actually deciding that we've got a viable channel and being in a position to deliver" on mutual confidence-building measures, said a senior U.S. official.

While some U.S.-Taliban contacts have been previously reported, the extent of the underlying diplomacy and the possible prisoner transfer have not been made public until now.

The reconciliation effort, which has already faced setbacks including a supposed Taliban envoy who turned out to be an imposter, faces hurdles on multiple fronts, the U.S. officials acknowledged.

They include splits within the Taliban; suspicion from Karzai and his advisers; and Pakistan's insistence on playing a major, even dominating, role in Afghanistan's future.

Obama will likely face criticism, including from Republican presidential candidates, for dealing with an insurgent group that has killed U.S. soldiers and advocates a strict Islamic form of government.

But U.S. officials say that the Afghan war, like others before it, will ultimately end in a negotiated settlement.

"The challenges are enormous," a second senior U.S. official acknowledged. "But if you're where we are ... you can't not try. You have to find out what's out there."

Next steps?
If the effort advances, one of the next steps would be more public, unequivocal U.S. support for establishing a Taliban office outside of Afghanistan.

U.S. officials said they have told the Taliban they must not use that office for fundraising, propaganda or constructing a shadow government, but only to facilitate future negotiations that could eventually set the stage for the Taliban to reenter Afghan governance.

On Sunday, a senior member of Afghanistan's High Peace Council said the Taliban had indicated it was willing to open an office in an Islamic country.

But underscoring the fragile nature of the multi-sided diplomacy, Karzai on Wednesday announced he was recalling Afghanistan's ambassador to Qatar, after reports that nation was readying the opening of the Taliban office. Afghan officials complained they were left out of the loop.

On a possible transfer of Taliban prisoners long held at Guantanamo, U.S. officials stressed the move would be a 'national decision' made in consultation with the U.S. Congress. Obama is expected to soon sign into law the 2011 defense authorization bill that contains new provisions on detainee policy.

There are slightly fewer that 20 Afghan citizens at Guantanamo, according to various accountings. It is not known which ones might be transferred, nor what assurances the White House has that the Karzai government would keep them in its custody.

Guantanamo detainees have been released to foreign governments--and sometimes set free by them--before. But the transfer as part of a diplomatic negotiation appears unprecedented.

Ten years after the repressive Taliban government was toppled by its Afghan opponents and their Western backers, a hoped-for political settlement has become a centerpiece of the U.S. strategy to end a war that has killed nearly 3,000 foreign troops and cost the Pentagon alone $330 billion.

While Obama's decision to deploy an extra 30,000 troops in 2009-10 helped push the Taliban out of much of its southern heartland, the war is far from over. Militants remain able to slip in and out of lawless areas of Pakistan, where the Taliban's senior leadership is located.

Bold attacks from the Taliban-affiliated Haqqani network have undermined the narrative of improving security and raised questions about how well an inexperienced Afghan military will be able to cope when foreign troops go home.

In that uncertain context, officials say that initial contacts with insurgent representatives since U.S. Secretary of State Hillary Clinton publicly embraced a diplomatic strategy in a February 18, 2011 speech have centered on establishing whether the Taliban was open to reconciliation, despite its pledge to continue its 'sacred jihad' against NATO and U.S. soldiers.

"The question has been to the Taliban, 'You have got a choice to make. Life's moving on," the second U.S. official said. "There's a substantial military campaign out there that will continue to do you substantial damage ... Are you prepared to go forward with some kind of reconciliation process?"

U.S. officials have met with Tayeb Agha, who was a secretary to Mullah Omar, and they have held one meeting arranged by Pakistan with Ibrahim Haqqani, a brother of the Haqqani network's founder. They have not shut the door to further meetings with the Haqqani group, which is blamed for a brazen attack this fall on the U.S. embassy in Kabul and which senior U.S. officials link closely to Pakistan's intelligence agency.

U.S. officials say they have kept Karzai informed of the process and have met with him before and after each encounter, but they declined to confirm whether representatives of his government are present at those meetings.

Evolving Taliban position?
Officials now see themselves on the verge of reaching a second phase in the reconciliation process that, if successful, would clinch the confidence-building measures and allow them to move to a third stage in which the Afghan government and the Taliban would sit down together in talks facilitated by the United States.

"That's why it's especially delicate -- because if we don't deliver the second phase, we don't get to the pay-dirt," the first senior U.S. official said.

Senior administration officials say that confidence-building measures must be implemented, not merely agreed to, before full-fledged political talks can begin. The sequence of such measures has not been determined, and they will ultimately be announced by Afghans, they say.

Underlying the intensive efforts of U.S. negotiators are fundamental questions about whether - and why - the Taliban would want to strike a peace deal with the Western-backed Karzai government.

U.S. officials stress that the 'end conditions' they want the Taliban to embrace -- renouncing violence, breaking with Al Qaida, and respecting the Afghan constitution -- are not preconditions to starting talks.

Encouraging trends on the Afghan battlefield - declining militant attacks, a thinning of the Taliban's mid-level leadership, the emergence of insurgent-on-insurgent violence -- are one reason why U.S. officials believe the Taliban may be more likely to engage in substantive talks than in the past.

They also cite what they see as an overlooked, subtle shift in the Taliban's position on reconciliation over the past year, based in part by statements from Mullah Omar marking Muslim holidays this year.

In July, the Taliban reiterated its long-standing position of rejecting any peace talks as long as foreign troops remain in Afghanistan. In October, a senior Haqqani commander said the United States was insincere about peace in Afghanistan.

But U.S. officials say the Taliban no longer wants to be the global pariah it was in the 1990s. Some elements have suggested flexibility on issues of priority for the West, such as protecting rights for women and girls.

"That's one of the reasons why we think this is serious," a third senior U.S. official said.

Risky strategy
Yet as the process moves ahead, the idea of seeking a peace deal with an extremist movement is fraught with challenge.

At least one purported insurgent representative has turned out to be a fraud, highlighting the difficulty of vetting potential brokers in the shadowy world of the militants largely based in Pakistan.

And the initiative was dealt a major blow in September when former Afghan President Burhanuddin Rabbani, who headed peace efforts for Karzai, was assassinated in an attack Afghanistan said originated in neighboring Pakistan.

Since then, Karzai has been more ambivalent about talks. He ruled out an early resumption in negotiations and said Afghanistan would talk only to Pakistan 'until we have an address for the Taliban.'

The dust-up over the unofficial Taliban office in Qatar, with a spokesman for Karzai stressing that Afghanistan must lead peace negotiations to end the war, suggests tensions in the U.S. and Afghan approaches to the peace process.

Speaking in an interview with CNN aired on Sunday, Karzai counseled caution in making sure that Taliban interlocutors are authentic -- and authentically seeking peace. The Rabbani killing, he said, was a demonstration of such difficulties and "brought us in a shock to the recognition that we were actually talking to nobody."

Critics of Obama's peace initiative are deeply skeptical of the Taliban's willingness to negotiate given that the West's intent to pull out most troops after 2014 would give insurgents a chance to reclaim lost territory or nudge the weak Kabul government toward collapse.

While the United States is expected to keep a modest military presence in Afghanistan beyond then, all of Obama's 'surge' troops will be home by next fall and the administration - looking to refocus on domestic priorities -- is already exploring further reductions.

Another reason to be circumspect is the potential spoiler role of Pakistan, which has so far resisted U.S. pressure to crack down on militants fueling violence in Afghanistan and to cooperate more closely with the U.S. military and diplomatic campaign there.

Such considerations make reconciliation a divisive initiative even within the Obama administration. Few officials describe themselves as optimists about the peace initiative; at the State Department, which is formally leading the talks, senior officials see the odds of brokering a successful agreement at only around 30 percent.

"There's a very real likelihood that these guys aren't serious ... which is why are continuing to prosecute all of the lines of effort here," the third senior U.S. official said. While NATO commanders promise they will keep up pressure on militants as the troop force shrinks, they are facing a tenacious insurgency in eastern Afghanistan that may prove even more challenging than the south.

Still, with Obama committed to withdrawing from Afghanistan, as the United States did last week from Iraq, the administration has few alternatives but to pursue what may well prove to be a quixotic quest for a deal.

"Wars end, and the end of wars have political consequences," the second official said. "You can either try to shape those, or someone does it to you."