Mullah Mohammad Rafiq, a 28-year-old Taliban fighter with kohl-lined eyes and shoulder-length hair spilling from his black turban, couldn't believe his good luck. Last summer his 20-man guerrilla unit was summoned to the district of Argandab in Kandahar province to rendezvous with Mullah Shahzada Akhund. A senior Taliban commander, Shahzada had just been released from nearly three years' imprisonment by the United States at Guantanamo Bay, Cuba. At sunset one day, Rafiq's unit was ordered to accompany Shahzada, who was alternately talking on a satellite phone and a walkie-talkie, on a hike into some rocky hills; there they camped for the night. Around 11 p.m. two motorcycles arrived. Shahzada greeted the heavily armed drivers, who then flashed their headlights in code toward a far-off hill. Some 40 minutes later six more motorbikes roared into the makeshift guerrilla camp. Riding on the back of one was a relatively tall man wearing a black turban, a scarf partially covering his face, a blanket over his shoulders and traditional, baggy, black shalwar khameez. Shahzada rushed over, then kissed the man's forehead and both of his hands.

Two subcommanders fell on their knees.

Rafiq says the visitor was the Taliban's elusive, one-eyed leader, Mullah Mohammed Omar. Surrounded by bodyguards, he and Shahzada walked to a nearby orchard where blankets were placed on the ground. Rafiq, standing guard only a few feet away, says he could see the dignitary's face clearly in the light of the full moon. Rafiq had never seen Mullah Omar before--few Afghans ever have--but he recognized the Leader of the Faithful, as Omar is popularly known, by his fake right eye and by his relatively loud voice and fast-speaking style, which he'd heard many times on audiocassettes that circulate among the Taliban and are even sold in markets in Pakistan. He says Mullah Omar appeared in good health.

The Taliban leader told Shahzada, who was killed 10 days later in a friendly-fire incident, that he didn't want to hear about the rigors of his imprisonment. He said that the Taliban's so far unsuccessful fight to dislodge the Americans from Afghanistan was simply Allah's way of testing them. "Our jihad will be successful," he said. "We only have to fight harder and be patient." Then Mullah Omar turned his attention to rallying the troops. He urged the men not to be afraid of America's overwhelming military power. "You shouldn't be terrified of the U.S.'s aircraft, machines, technology and propaganda," he added. "If the Americans are so powerful then why can't they find this simple Taliban who walks openly on the earth?"

If Osama bin Laden is the most-wanted terrorist in the world, then his former host in Afghanistan, Mullah Omar, is arguably the No. 2 man on the list. According to NEWSWEEK interviews with Taliban fighters, commanders and officials, the mysterious emir is not only alive but fully in charge of his hard-pressed guerrilla movement. Yet despite his efforts, the Taliban's three-year-old guerrilla campaign against some 18,000 American troops and Kabul's ragtag military may be in danger of collapsing. According to the commander of U.S. forces in Afghanistan, Lt. Gen. David Barno, the Taliban's roughly 2,000 insurgents have all but stopped fighting in recent months. Afghan security forces claim to have captured more than two dozen suspected Taliban operatives in the first two weeks of December, including two of the movement's most wanted, who were found in a house in Kandahar: Toor Mullah Naqibullah Khan was said to be a senior security aide to Mullah Omar during the Taliban's years in power, and Mullah Qayoom Angar was a senior guerrilla commander. Mullah Omar's top military commander, Mullah Dadullah Akhund, downplayed those two arrests, saying the men were merely "ordinary Taliban."

Whether the two men were leaders or followers, the Taliban is in bad shape. October's successful presidential election was a stinging rebuke to their cause. Their oft-repeated, chilling threats to "attack" anyone who organized, registered for or voted in the contest proved hollow. Nearly 75 percent of registered voters, or 8.5 million Afghans, ignored the threats and cast ballots in the country's first-ever democratic poll, which was won easily by interim President Hamid Karzai. Even some Taliban fighters were seen voting. "There is no question that the Taliban view the election as a defeat and a tremendous loss of face," says Barno. Adds Karzai: "The elections proved that the Taliban don't have a place among the people."

According to Barno, the battlefield calm reflects a sharp internal debate going on within the Taliban's senior leadership. One of the major questions, at least among the Taliban's more moderate elements, is whether the armed struggle should be abandoned. According to senior Afghan and U.S. military officials, there's solid evidence that "a number" of senior Taliban commanders are contemplating laying down their arms under an Afghan government amnesty program that has yet to be codified. The plan would allow Taliban fighters and even commanders who've not been involved in egregious human-rights violations to return to a normal life without punishment if they lay down their weapons and agree to abide by the country's new Constitution. If it works, the amnesty offer could mark the beginning of the end of the bloody Taliban insurgency. "The name of the game right now is this amnesty offer," says Pakistani author and noted Taliban expert Ahmed Rashid. He adds: "The most significant thing that's emerged over the past three years is that there's little or no public support for the Taliban's armed struggle."

Karzai and the United States would like to persuade moderate, former Taliban officials who have already been captured or have turned themselves in to join the political process. The presence of a credible former Taliban official in a position of power could act as a strong incentive for other Taliban to defect. Mullah Wakil Ahmed Muttawakil, Mullah Omar's last foreign minister, is a favorite of both Karzai and Washington. He surrendered in February 2002, just months after the Taliban's defeat, and spent months in prison before being released and put under house arrest in Kabul.

When Mullah Omar was in power, Muttawakil was the acceptable, public face of the Taliban, who privately opposed the leader's policy of giving sanctuary to bin Laden and allowing Al Qaeda to grow into a state within a state. According to Muttawakil's close friends, Karzai has made him two offers: he could join the next government, or he could launch a legal Pashtun political faction that would contest next spring's parliamentary elections. But Muttawakil is hesitant, his friends say, fearing assassination by Taliban radicals. He is said to prefer going into exile in an Arab country rather than risk being a part of the new order in Afghanistan.

One sign of Taliban weakness, says Barno, is that the group relies increasingly on paid operatives rather than on motivated volunteers, to carry out attacks. "We see more people involved who've been paid to attack," says Barno. "We see rewards being offered and given for successful IED [improvised explosive device] and rocket attacks." But running a jihad for hire may not be effective, because even Mullah Omar's operatives admit they're short on money and on essential military equipment. One Taliban unit in Ghazni province says it has plenty of AK-47 ammunition and RPGs, but has been waiting weeks for a promised shipment of land mines necessary to fashion IEDs. Fighters in the eastern provinces of Kunar and Laghman are in far worse shape. They complain that they lack money to buy weapons, to support fighters, to look after themselves and their families, and to take care of wounded guerrillas.

Adding to its problems, the Taliban seems to be getting less funding from Al Qaeda, largely because bin Laden is believed to feel that Mullah Omar's guerrillas are not putting up an aggressive and effective fight. "We are not getting as much money as we used to from Al Qaeda," says Mullah Hai, a former close aide to Mullah Omar who lives near Quetta. (The honorific "mullah" is granted to graduates of the Islamic schools, or madrassas, from which the Taliban sprang.) "The Arabs complain that we lack organization and solid battlefield results." Some Taliban feel they are in a Catch-22: they can't get more funding unless they carry out more attacks, but they can't ramp up the level of hostilities without more funding.

Sensing that his movement could be ebbing, Mullah Omar seems to have become more active than ever in recent months. Traveling largely by motorbike, he's been visiting small, largely ethnic-Pashtun guerrilla units in the poor, isolated areas of southern and southeastern Afghanistan--the provinces of Zabul, Uruzgan and Kandahar, where the highly mobile rebels are ensconced. Afghan and U.S. forces control most of this desolate region by day, but Taliban units and their sympathizers take charge at night.

Senior Taliban sources say that Mullah Omar occasionally exchanges written messages with bin Laden, though there is no regular contact or formal channel of communication between the two. Barno describes the communication network between Al Qaeda and the Taliban as being "very informal, very decentralized." Mullah Omar also reaches out to his fighters and supporters by recording audiocassettes featuring inspirational verses from the Qur'an and his own boilerplate speeches. The tapes are then duplicated and sent to Taliban units or sold in the bazaars. "Mullah Omar has never been more active," the Taliban's spokesman Mufti Lutfullah Hakimi told NEWSWEEK in a secret meeting along the Pakistani-Afghan border. "Anyone who thinks he's isolated, hiding in a cave and fearing for his life couldn't be more wrong."

The Taliban are obviously reluctant to tackle heavily armed U.S. troops. Rather, they tend to stage small hit-and-run attacks against Afghan militia and police posts and soft civilian targets--especially aid and reconstruction workers. According to Mullah Abdullah, a 25-year-old Taliban fighter who sports a long, curly beard and fingers worry beads, Mullah Omar told a small gathering of village elders this past summer that "there is honor in poor people traveling in the dust and not along new roads built by invaders and their servants that have cost us our freedom. Jihad is the only way to defend Muslim culture." Already this year more than 40 Afghan and foreign relief and reconstruction workers have been killed. In response, aid agencies have largely stopped operating in more insecure regions in the south and southeast.

Mullah Omar and his fighters still have a constituency, largely among the tens of thousands of taliban, or religious students, studying at the many madrassas sprinkled across the border in Pakistan. The Taliban have placed veteran fighters at several madrassas in the area, where they've become firebrand teachers and work to keep the jihadi spirit alive. Almost every mosque in Quetta, Baluchistan's capital, and in the border town of Chaman, openly preaches jihad and frequently broadcasts tributes to Mullah Omar over loudspeakers. Afghan officials from Kandahar say that the Taliban presence in Quetta and Chaman is so overt that they fear for their lives if they venture out in public when visiting the two towns. Taliban fighters cross the ill-defended border with impunity to avoid capture and to rest.

The baluchistan connection is crucial to the movement's survival. Pakistan could probably finish off the Taliban if it cracked down on militants in that province and shut down the madrassas. "The Taliban would be considerably weakened if it lost its ability to move back and forth across the Pakistani border and to recruit in Pakistani refugee camps and madrassas," says Vikram Parekh, a senior analyst for the International Crisis Group in Kabul. But analysts suggest that Pakistan President Pervez Musharraf may want to maintain relations with--and influence over--Pakistan's former allies as a means of guaranteeing Islamabad's interests in Afghanistan. In March several thousand Pakistani soldiers opened a major offensive against some 500 low-level, Qaeda-linked, largely Chechen, Tajik and Uzbek militants in the South Waziristan tribal agency just north of Baluchistan. But curiously, the Pakistani operation stopped at the Baluchistan border.

For all their difficulties, Mullah Omar and his core commanders remain spiritually and ideologically committed to their jihad. The emir recently called an urgent meeting with a 12-man fighting unit in Zabul province. According to Mullah Abdullah, the guerrillas gathered at a mud-brick compound in the mountains and waited for their revered visitor. Soon four motorcycles roared up a rocky path. Driving one of the bikes was Mullah Omar, who had a pistol in a leather holster strapped to his waist.

The Taliban leader sat against the wall in the far corner of the house and began chanting Qur'anic verses. He then kissed the young son of a commander who'd been killed recently and gave the boy a fistful of money. He announced that he wanted the word to go out that the district was too quiet. He urged the local insurgents to initiate more military activity. "This area is not resisting," he said sharply. "Wouldn't it be better and more glorious to die as a martyr in the jihad," he asked, "than to die of old age in your bed?" Unfortunately for the peripatetic rebel, more and more of his followers would tend to disagree.