Each year, the U.S. State Department formally rebukes and imposes penalties on governments that protect and promote terrorists. But since 1996, when the Taliban seized power in Afghanistan, the nation harboring Osama bin Laden has never made the department's list of terrorist-sponsoring countries.

The omission reflects more than a decade of vexing relations between the United States and Afghanistan, a period that found the State Department more focused on U.S. oil interests and women's rights than on the growing terrorist threat, according to experts and current and former officials.

Even as its cables and reports showed growing anxiety, the department vacillated between engaging and isolating the Taliban. It was not until 1998, when two U.S. embassy bombings were linked to bin Laden, that officials knew they must directly address Afghanistan's protection of the terrorist's organization.

U.S. diplomats held out hope that the threat of adding Afghanistan to the terrorism list was "one card we had to play" in pressing the Taliban to turn over bin Laden, according to a former Clinton administration adviser.

The lack of a coherent policy toward Afghanistan was part of a broader miscalculation by the U.S. government, experts now realize. By allowing terrorism fueled by anti-American rage to take root in Afghanistan, officials underestimated the potential for danger.

"This is hard to say and I haven't found a way to say it that doesn't sound crass," said former secretary of state Madeleine K. Albright. "But it is the truth that those [attacks before Sept. 11] were happening overseas and while there were Americans who died, there were not thousands and it did not happen on U.S. soil."

Taliban Not 'Objectionable'

The day after the Taliban seized Kabul in September 1996, State Department spokesman Glyn Davies encountered tough questions from U.S. reporters.

Victorious in a brutal fight against rival factions, the Taliban claimed power after castrating and killing former president Najibullah and hanging the corpses of him and his brother from a post at the entrance to the Presidential Palace.

Davies reported the events matter-of-factly and told reporters the United States saw "nothing objectionable" about the Taliban imposing its strict interpretation of Islamic law.

"So let me get this straight," a reporter asked. "This group, this Islamic fundamentalist group that has taken Afghanistan by force and summarily executed the former president, the United States is holding out possibility of relations?"

"I'm not going to prejudge where we're going to go with Afghanistan," Davies said.

For seven years, the State Department had loosely monitored Afghanistan's civil warfare after defeated Soviet troops pulled out of the country in 1989. Prolonged fighting had left Afghanistan devastated, with tides of refugees, a largely illiterate population and a ravaged agricultural economy based heavily on opium production.

Promising to restore law and order, the Taliban said that refugees could return "without fear." The United States hoped the regime would restore stability.

Davies' comments reflected years of U.S. support for Afghan rebels during the war with the Soviets. The U.S. government had covertly supplied aid to religious fighters known as mujaheddin who wanted to restore an Islamic state.

In those ranks was bin Laden, a scion of a wealthy Saudi Arabian family. Bin Laden had arrived in Afghanistan in 1982 to fight the Soviets, and stayed through 1990, forming alliances with fundamentalist leaders, including Mohammad Omar, the Taliban supreme commander.

None of this seemed particularly threatening to most of the diplomatic corps at the State Department, which was consumed with events in Iran and Iraq and the brewing nuclear arms race between Pakistan and India.

In fact, when the Clinton administration took over in 1993, Warren Christopher mentioned bringing peace to Afghanistan in his confirmation hearings for secretary of state, then never made a significant speech about the country again. Christopher declined requests for an interview.

But there were warnings. Peter Tomsen, a longtime State Department official who was a special envoy to Afghanistan, and a few others insisted that the United States should help rebuild the country to protect it from extremists. By disengaging, the United States risked "throwing away the assets we have built up in Afghanistan over the last 10 years, at great expense," he argued in a confidential 1993 memo to top State Department officials.

"The U.S. mistake was to ignore Afghanistan," Tomsen says today. "We walked away."

After the Cold War, the United States was "weary of Afghanistan," said Robin L. Raphel, the assistant secretary for South Asian affairs at the State Department from 1993 to 1997. "It was really a struggle to get attention and resources."

Yet to a large extent, the United States deferred to Pakistan, its ally against the Soviet Union, as Afghanistan's turbulence dragged on, according to other former officials.

"The U.S. had what I call a derivative policy toward Afghanistan," said Elie D. Krakowski, a former special assistant to the secretary of defense, who has written extensively on Afghanistan. "That is, it had no policy on Afghanistan on its own, and whatever Pakistan said, we bought."

The United States was reluctant to criticize Pakistan as it further aligned itself with the Taliban after Kabul's fall.

With U.S. officials paying more attention to Afghanistan's neighbors, bin Laden returned to the country. The United States had pressed Sudan to evict him for suspected terrorist activities but did not sustain the pressure when Omar welcomed him in as a guest.

Activities at bin Laden's training camps increased. A State Department report in August 1996 labeled him one of the "most significant sponsors of terrorism today."

The Pipeline Connection Throughout the mid-1990s, a U.S. oil company was tracking the outcome of the Afghan conflict. Unocal, a California-based energy giant, was seeking rights to build a massive pipeline system across Afghanistan, connecting the vast oil and natural gas reserves of Turkmenistan to a plant and ports in Pakistan.

State Department officials promoted Unocal's pipeline project in their role of helping U.S. companies find investments in the region, Raphel said.

Raphel, who shuttled to Kandahar to meet with Taliban leaders and met at other points with different groups, said the agency also thought the project might help rally them around a common goal. "We worked hard to make all the Afghan factions understand the potential, because the Unocal pipeline offered development opportunities that no aid program nor any Afghan government could," she said.

But Unocal faced fierce competition. Because it was unclear which of Afghanistan's factions would ultimately take control, international oil companies jockeyed to build alliances.

Unocal appealed to the Taliban and received assurances that it would support a $4.5 billion project rivaling the trans-Alaska pipeline. The deal promised to be a boon for the Taliban, which could realize $100 million a year in transit fees.

But Unocal also needed U.S. backing. To secure critical financing from agencies such as the World Bank, it needed the State Department to formally recognize the Taliban as Afghanistan's government.

Unocal hired former State Department insiders: former secretary of state Henry A. Kissinger, former special U.S. ambassador John J. Maresca and Robert Oakley, a former U.S. ambassador to Pakistan.

Zalmay Khalilzad, an Afghan-born former Reagan State Department adviser on Afghanistan, entered the picture as a consultant for a Boston group hired by Unocal. Khalilzad and Oakley had dual roles during this period because the State Department also sought their advice. Khalilzad is now one of President Bush's top advisers on Afghanistan.

Officially, Unocal refused to take sides in the Afghan conflict. But its favors to the Taliban sent a clear signal to rivals. Unocal gave the Taliban a fax machine to speed its communications and funded a job training program affiliated with the University of Nebraska that was set up in Kandahar, the Taliban stronghold in southeast Afghanistan.

Before Unocal, the Taliban "were just a bunch of wild jihadists running around. They came out of nowhere," said Richard Dekmejian, a University of Southern California terrorism specialist, using the Islamic term for holy warriors.

In a late 1997 public relations move, Unocal flew Taliban officials to tour the company's U.S. offices. They took a side trip to the beach, then flew to Washington for meetings in the Capitol and at the State Department to press their case for U.S. recognition.

But the visit only fueled the outrage of women's rights groups who were incensed by Unocal's coziness with the regime.

The State Department's human rights division had been chronicling the Taliban's increasingly repressive treatment of women. Women were barred from schools and jobs and required to wear head-to-toe shrouds known as burqas. Secluded inside homes with darkened windows, they could be seen in public only in the company of male relatives.

But reports of these and other human rights violations -- including stonings, amputations and executions -- had little effect until Secretary of State Albright took over in Clinton's second term. She elevated the Afghanistan focus, naming her close colleague Karl F. "Rick" Inderfurth to head the South Asia Bureau.

She also planned a November 1997 trip to meet with Afghan women huddled in refugee camps.

Albright's trip was a sign that the Taliban treatment of women, more than any other issue, "finally sparked their interest on the seventh floor," the State Department's executive suite, said Lee O. Coldren, who directed the little-noticed office on Afghanistan from 1994 to 1997.

Crucial Albright Visit "Despicable."

Albright emerged from a mud-brick camp in Nasir Bagh sheltering 80,000 Afghans, and with that single word, she ratcheted up the U.S. rhetoric.

She had listened as women and girls described deplorable treatment, including a 13-year-old who told of watching her older sister jump to her death out a window rather than live under the regime.

The visit "was one of those watershed events for me," Albright said recently.

Women's groups had been agitating at the State Department since the Taliban's 1996 takeover but believed they were not taken seriously. In meetings, Afghan American women described life before the Taliban, when well-educated, professional women moved freely in some Afghan cities.

But among the State Department's old hands, "there was a lot of putting down, like these women didn't know what they were talking about," said Eleanor Smeal, president of the Feminist Majority Foundation.

The women's effort had an important ally at the White House, first lady Hillary Rodham Clinton. And at the United Nations, the two women who headed the food and children's care programs linked their Afghanistan aid to improved treatment of women.

The issue of international terrorism had no such constituency. A bin Laden fatwa in early 1998 urged followers to target the United States and its citizens, but the notice was largely ignored by U.S. groups and businesses concentrating on Afghanistan.

That July, U.S. women's groups organized protests of Unocal's plans to go ahead with its project despite what Smeal called the Taliban's "horrific gender apartheid."

The pressure from women's groups began to have an impact domestically. It became increasingly clear that U.S. recognition of the Taliban -- the seal of approval needed so desperately by Unocal -- would be politically implausible.

Why Not on List? Shortly after Inderfurth took over the State Department office dealing with Afghanistan and Pakistan in 1997, he posed a question: Why isn't Afghanistan on the list of terrorist-sponsoring nations?

Inclusion would have meant a ban on arms sales, constraints on business and a cutoff of economic aid. The same seven countries had been on the list since 1993 -- Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria.

With Afghanistan, there was a catch. If the Taliban was branded a "state sponsor" of terrorism, that meant the United States would inadvertently be acknowledging the Taliban as the official government. And the State Department had resisted doing so.

Instead, the United States was using other methods to press its case. It leaned on Pakistan to persuade the Taliban to stop harboring bin Laden. Pakistan had developed a close relationship with the Taliban, supplying arms and using camps in Taliban-controlled territory to train its own guerrillas.

Consequently, if Afghanistan made the list, the procedure for designating terrorist sponsors would have argued for also sanctioning Pakistan. "We weren't prepared to totally isolate Pakistan," an official said.

"The whole approach was so absurd," said Phil Smith, a spokesman for Afghanistan's Northern Alliance faction, a Taliban rival. "It ignored the reality that it was the Pakistani military that had helped to create and maintain the Taliban regime."

The 1998 bombings of U.S. embassies in Kenya and Tanzania, which killed 224 people, including 12 Americans, altered the landscape. The attacks were quickly linked to bin Laden, and President Bill Clinton froze bin Laden's assets and prohibited U.S. firms from doing business with him. Thirteen days after the attacks, the United States directed missile strikes on terrorist camps in Afghanistan and Sudan.

Doing more, Albright said, would have been a challenge "since we did not have the kind of support we have now for our actions on terrorism. Back then, we were being criticized both for doing too much and for not doing enough."

The bombings abruptly ended Unocal's hopes of a pipeline project. The company backed out on Dec. 4, 1998, citing business reasons. News reports at the time speculated that Unocal feared it could face sanctions for doing business with the Taliban.

At the White House, debate resurfaced about adding Afghanistan to the terrorist list. Officials reasoned that they could use the threat of listing to bargain with the Taliban, according to one former adviser.

By 1999, the United Nations imposed the first of two sets of sanctions that cut off Taliban funds and arms.

In that same year, the State Department formally named bin Laden's al Qaeda group as a "foreign terrorist organization," which froze its U.S. assets, barred visas for its members and made it a crime to support the group. Still it did not formally single out Afghanistan or the Taliban as terrorist sponsors.

Inderfurth and others believed that step was unnecessary because Clinton's order and the United Nations sanctions were the "functional equivalent" of declaring the Taliban as a state sponsor.

To some analysts, the actions were too little, too late.

"Right up until the embassy bombings, we were willing to believe their assurances," said Julie Sirrs, a former analyst on Iran for the Defense Intelligence Agency who also monitored the Taliban.

"We were not serious about this whole thing, not only this administration, but the previous one," and that holds true until the Sept. 11 attacks, said Middle East specialist Dekmejian.

Albright disagrees. She said terrorism "was not a back burner issue at all. We kept pushing it and pushing intelligence agencies -- the FBI, CIA -- to work on it."

The State Department, she said, "consumed all the intelligence. . . . Given the intelligence we had, we followed through as best we could.

"So the question comes up of how do you fight terrorism," Albright said. "The tragedy of this, and it's horrible, is that it took this kind of event to generate the support we need to do more."

Staff writers Joe Stephens and Gilbert M. Gaul and researcher Alice Crites contributed to this report.

In May 1997, Taliban fighters celebrated capture of Mazar-e Sharif from the Northern Alliance. A visit later that year to Afghan women refugees by Secretary of State Madeleine K. Albright focused new U.S. attention on the Taliban's treatment of women, but not on its support of terrorists.