* US still poised to start withdrawing troops in July 2011
* Review finds Taliban momentum arrested in many areas
* Skeptics question progress on governance, corruption (Adds fresh reaction, background)
By Missy Ryan
WASHINGTON, Dec 16 (Reuters) - A review of President Barack Obama's Afghanistan strategy reported on Thursday that headway against insurgents likely will allow the United States to start pulling out troops next year as planned even though major challenges remain.
The long-awaited White House review said foreign forces had halted the Taliban's momentum in many areas, putting them on track to begin handing control to Afghan forces in 2011 despite hurdles including rebuilding war-torn Afghanistan and the need for Pakistan's "sustained denial" of insurgent safe havens.
Obama announced a year ago when he unveiled a temporary troop surge that he planned to begin withdrawing U.S. forces from the 9-year-old war in July 2011, and the review keeps the United States on the path to doing so.
"Buried in the summary is the acknowledgment of two significant challenges for the stabilization effort: the continuing Taliban sanctuaries in Pakistan and the poor quality of governance in Afghanistan," said Vanda Felbab-Brown, an analyst with the Brookings Institution in Washington.
"In fact, both issues remain enormous obstacles for success," she said.
Despite cautious optimism from the White House a year after Obama ordered the extra 30,000 troops to Afghanistan, civilian and military deaths have reached record highs in Afghanistan and Obama must overcome skepticism in the U.S. Congress and among Americans tired of the long, expensive conflict.
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The review comes at the end of the bloodiest year since U.S.-backed Afghan forces ousted the Taliban in 2001, with almost 700 foreign troops killed so far. Yet Afghan civilians bear the brunt of the conflict as insurgents expand from strongholds into once-peaceful areas in the north and west.
A U.S. and NATO force of 150,000 troops, including 100,000 Americans, has pushed back the Taliban in cities like southern Kandahar, an encouraging sign as Washington hopes to start putting growing ranks of Afghan soldiers in charge.
But violence persists. On Thursday, a roadside bomb killed 14 civilians in western Afghanistan and four Afghan soldiers died in a U.S. air strike overnight. [ID:nSGE6BF086]
In addition, the International Committee of the Red Cross (ICRC) said on Wednesday that worsening violence in Afghanistan has made it more difficult than at any time in three decades for aid groups to reach people in need. [ID:nSGE6BE0C4]
In the absence of major strides by Afghan forces, who are growing rapidly in numbers but still learning to shoot and in many cases to read, those gains "cannot be maintained without continued U.S. involvement, both military and financial," said Caroline Wadhams, an expert at the Center for American Progress in Washington.
PAKISTAN CENTRAL
Calling Pakistan "central" to success in the region, the review found al Qaeda had been weakened in Pakistan but was still capable of plotting attacks against the United States.
Officials said progress in ties with Islamabad, which Washington is pressuring to go after militants who launch attacks in Afghanistan, had been substantial but "uneven."
"I just don't see what kind of further pressure the Americans can place on the Pakistanis. It's sort of a risky thing," said Kamran Bokhari, director for Middle East and South Asia with intelligence firm STRATFOR.
"On one hand, you've got to get more cooperation from the Pakistanis. But on the other hand, you don't want to apply too much pressure that leads to tensions with the Pakistanis that undermine the whole strategy."
The White House review noted the need for tweaks to its Pakistan strategy, including energized aid work along the two countries' wild border as part of efforts to corral insurgents.
The review is unlikely to end debate within the U.S. government over strategy for the region. Officials say the intelligence community has a gloomier view of the situation than that of military leaders. [ID:nN15170959]
The New York Times reported this week that two recent classified intelligence reports said the Afghanistan strategy had little chance of success unless Pakistan prevented insurgents from launching attacks from border sanctuaries.
Experts say security gains will not be sustained if a weak, corrupt Afghan state is not strengthened in the near term.
In some areas, Taliban intimidation has brought local government to a halt. Western suspicions that President Hamid Karzai has failed to crack down on corrupt officials have helped widen a rift with the Afghan leader. After nine years of aid efforts, poverty and illiteracy remain widespread.
The review called reducing corruption a key step in "sustaining the Afghan government." Surprisingly, Karzai was not mentioned by name in the report, even though his Pakistani counterpart was.
The foreign forces in Afghanistan have until the end of 2014 to hand security control to Afghan forces, as agreed with Karzai at a NATO summit in Lisbon in November.
The war in Afghanistan, which now costs at least ${esc.dollar}113 billion a year, is a fiscal drain as Obama struggles to revive the U.S. economy and is a source of tension with some fellow Democrats who see little chance of quick success.
It threatens to become more of a political liability for Obama next spring, when debate over bringing home U.S. troops may sharpen.
(Additional reporting by Mohammed Abbas in London, Matt Spetalnick in Washington, and Chris Allbritton and Augustine Anthony in Islamabad; Editing by Will Dunham)
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