By Michael Georgy and Hamid Shalizi

KABUL (Reuters) - A top Afghan peace negotiator said he was cautiously optimistic about prospects for reconciliation with the Taliban and that all sides now realized a military solution to the war was not possible.

Mohammad Masoom Stanekzai also told Reuters that the Kabul government hoped to transform the Afghan Taliban, who have proved resilient after more than a decade of war against U.S.-led NATO and Afghan troops, into a political movement.

He predicted the highly lethal Haqqani militant network, the most experienced at guerrilla warfare, would join the peace process if the Afghan Taliban started formal talks.

Signs are emerging that the Afghan government is gaining momentum in its drive to persuade the Taliban to lay down their arms before most NATO combat troops pull out by the end of 2014, a timeline that makes many Afghans nervous.

Members of the Afghan government, the Taliban and some of their old enemies in the Northern Alliance, which fought the Taliban for years, discussed ways of easing the conflict during a recent meeting in France.

"I think one consensus was that everybody acknowledged that nobody will win by military (means)," said Stanekzai, who was badly wounded in a 2011 Taliban suicide bombing attack. "Everybody acknowledged that we have to enter into a meaningful negotiation."

Pakistan, long accused of supporting Afghan insurgents such as the Taliban, has sent the strongest signals yet that it will deliver on promises of helping the Kabul government and the United States bring stability to its neighbor. Pakistan is seen as critical to the process after three decades of upheaval in Afghanistan.

Ten years of Soviet occupation were followed by devastating civil war and the rise of the Taliban, who ruled from 1996 to 2001.

On Monday, Pakistan freed four Afghan Taliban prisoners who Afghan officials said were close to the group's reclusive leader, Mullah Mohammed Omar, and still had the clout to persuade commanders to pursue peace.

"EVERYBODY SHOULD BENEFIT"

Stanekzai stressed that in order to bring long-term stability, reconciliation efforts should aim to bring the Taliban and other insurgents into Afghan politics.

"The purpose of the peace process is we want all Afghans to be part of the political system," said Stanekzai, who studied at Cambridge and was in charge of disarmament in Afghanistan before becoming a senior member of the High Peace Council.

"This peace process should not just be a deal between a few people or between the government and the Taliban, but everybody should benefit from the peace process, and everybody should see a peaceful prospect for themselves for the future."

Some activists fear that the government will make concessions in order to pacify the Taliban that could hurt efforts to improve women's rights.

Stanekzai said Afghan security forces had made progress but acknowledged that more work was needed to ensure they would be ready to take over when the U.S. combat mission ends in 2014.

He also believes a free and fair presidential election in April 2014 are essential to prevent any further conflict. The last vote was plagued by allegations of widespread fraud.

"This is the time where we have to enter in negotiations to make sure that does not happen. But, as you know, politicians are always politicians. They are always in a power game."

Stanekzai warned that reconciliation was complex, with many moving parts having to be synchronized. Continued...