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By Jim Loney

KABUL, June 5 (Reuters) - While Iranian mortar rounds and other weapons have been found on Afghan battlefields there is no evidence that Tehran is supplying weapons to the Taliban, the U.S. general who leads the NATO war effort in the country said on Tuesday.

General Dan McNeill, who took control of NATO forces in Afghanistan in February, also said in an interview with Reuters that some lower-level Taliban militants could be incorporated into Afghan politics, but he saw no hope for a peace pact with the leadership of the Afghan rebel forces.

On the state of battle with the Taliban, McNeill said: "We think we have the upper hand right now."

The commander of the NATO's 36,000-strong International Security Assistance Force (ISAF), McNeill said Iranian mortars were routinely found in Afghan weapons caches, but there was no evidence they were part of a Tehran-organised operation.

"There certainly are weapons or munitions of Iranian origin, but when you say weapons being provided by Iran that would suggest there is some more formal entity involved in getting those weapons here," he said at ISAF's heavily fortified main base in Kabul. "That's not my view at all."

Iranian mortar rounds arrive in Afghanistan from many countries, he said.

"I just have no information to support that there's anything formal in some arrangement out of Iran to provide weapons here."

McNeill expressed concern that a new and more powerful type of roadside bomb called an explosively formed projectile (EFP) had recently been found in Afghanistan.

But he said he had seen no sign of portable air defense systems -- anti-aircraft missiles -- in the hands of the Taliban that would significantly alter NATO and U.S. air superiority.

CONVERTING THE TALIBAN

In answer to a question on whether a peace accord could be achieved with the Taliban and their al Qaeda allies, McNeill said he did not rule out the possibility some lower-level Taliban could join Afghan politics.

President Hamid Karzai had repeatedly extended olive branches and his government occasionally talks to the militants.

"I don't rule out some former Taliban becoming part of a legitimate political process in Afghanistan. It's already occurred. There are some in prominent government positions."

"I think that the strategy or technique of not negotiating with terrorists, with extremists, is a good one," McNeill said. "But I think it's entirely possible, I've heard President Karzai say, that there are a number of lower-level Taliban who could come over."

But of a possible peace accord with the leadership, he said: "I think some of those are incorrigible and I don't see much of an option there."

The long-expected spring offensive belonged to NATO forces rather than the Taliban, McNeill said, despite a rise in Taliban suicide attacks.

ISAF and U.S. coalition forces made progress in eastern areas and in a large-scale operation called "Achilles" in Helmand province meant to protect a key hydro-electric project at the Kajaki dam.

"Operation Achilles is a great tactical success," he said.

Asked why NATO and the U.S.-led coalition, with more than 50,000 troops in Afghanistan, have not been able to crush the smaller and less sophisticated Taliban, McNeill reiterated statements by NATO's secretary-general that more forces are needed to defeat such an insurgency.

"While we have a pretty good force here, it doesn't fit with the numbers anyone has ... prescribed in their doctrine (for an insurgency)," he said.

An insurgency is best defeated by local security forces, he said.

The Afghan army currently numbers about 21,000 troops in the field, McNeill said. Afghanistan's army chief said on Monday he did not expect the force to reach its full 70,000 strength until next year and would not be fully functional until 2011.

McNeill said he had seen no compelling evidence to suggest Osama bin Laden is alive or dead.

"I don't know. But if he is alive I don't think he's in Afghanistan and my charter goes to the borders of Afghanistan."

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