KABUL - Taliban insurgents rejected on Wednesday a U.S. offer of honorable reconciliation as a lunatic idea and said the withdrawal of foreign troops was the only way to end the war in Afghanistan.

With the Afghan conflict now in its eighth year, NATO-led forces and the Taliban are locked in a bloody stalemate with violence set to rise further this year as more U.S. troops arrive and seek to contain the insurgency ahead of August elections.

President Barack Obama is redoubling U.S. efforts with more troops, more diplomatic effort and more economic assistance, but he has also already spoken of the need for an exit strategy.

If the U.S. plan fails to show results, analysts say, time is on the Taliban side.

U.S. Secretary of State Hillary Clinton told an international conference on Afghanistan on Tuesday that those members of the Taliban who abandoned extremism must be granted an honorable form of reconciliation.

This matter was also raised in the past, said Taliban spokesman Zabihullah Mujahid, referring to comments by Obama last month who spoke of reaching out to moderate Taliban.

They have to go and find the moderate Taliban, their leader and speak to them. This is a lunatic idea, Mujahid said by telephone from an unknown location.

The 21,000 extra U.S. troops ordered by Obama to join the 70,000 foreign soldiers now fighting insurgents in Afghanistan showed the United States wanted the war to continue, Mujahid said, and the Taliban would keep fighting till they left.

There is no other way. We want our freedom and respect for our independence, Mujahid said.

Swiftly ousted by U.S.-led forces in 2001 for harboring al Qaeda after the September 11 attacks, the Taliban regrouped and have steadily spread their attacks from their traditional support base in the south and east to areas closer to the capital.

STALEMATE

NATO commanders admit that mainly British, Canadian and Dutch troops are locked in a stalemate in the south, unable to stop insurgent roadside and suicide bomb attacks without the active support of the population, while Taliban militants are incapable of overcoming Western troops in head-on battle.

Most of the new U.S. troops will be deployed in the south in an effort to break that stalemate, but while U.S. commanders say their forces, mainly in the east, are making progress against the insurgency, violence has risen steadily there too.

As Obama unveiled his new strategy he focused on the fight against al Qaeda and not allowing Afghanistan to again become a base for Osama bin Laden's group to attack the United States.

By doing so, Obama effectively changed the measure of success in Afghanistan from the Bush administration's goal of also defeating the Taliban and installing Western-style democracy.

Despite the Taliban's harsh rhetoric against foreign troops, the Islamist movement says it does not need al Qaeda support and has also toned down its criticism of the Afghan government.

The shifting stances offer a glimpse of what a possible peace deal may entail: Taliban repudiation of al Qaeda in return for a pledge to withdraw foreign troops.

But while moderate former Taliban officials have been involved in Saudi-sponsored talks to explore ways of opening dialogue with the insurgents, the Taliban are unlikely to engage in negotiations as long as they feel they are winning the war.

Strong indigenous security forces are a key to success in counter-insurgency, U.S. military doctrine states, and Obama said his new strategy would increase efforts to train Afghan forces and bring the Afghan army and police up to strength by 2011.

That date also coincides with the time by which, diplomats say, the Obama administration is likely to want to see results in Afghanistan -- a year before the next U.S. presidential election.

The Taliban meanwhile, do not have to win the war, analysts say. All they have to do is survive and wait for their opponents to lose the will to keep fighting.

(Writing by Jon Hemming; Editing by Jerry Norton)

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