What drove a rich Saudi boy to become a terrorist mastermind? After months of interviews, and gathering startling new testimony from al-Qaeda associates and enemies around the world, Afghanistan specialist Jason Burke sifts fact from rumour to provide the fullest account yet of the life of Osama bin Laden.

At every corner in the darkened village, guards stood with their Kalashnikovs and rocket-launchers at the ready. Sitting on rugs spread on the dirt floor of a mud-brick and wood house, two men ate a meal of rice, grilled mutton and vegetables. High above, the warplanes of America could be heard growling in the night.

The men, both in their mid-forties, bearded and dressed in the local traditional baggy long shirt and trousers, washed, ate, prayed and then talked.

Osama bin Laden, the world's most wanted man, and Mullah Mohamed Omar, supreme leader of the Taliban regime, had a lot to discuss. A few days earlier, at 8.45pm on 30 September, US and British cruise missiles had started hitting targets across Afghanistan in retribution for the terrorist attacks that had killed 5,000 people in New York and Washington nearly three weeks earlier. Now death and destruction had come to villages, cities and military camps throughout Afghanistan. Several missiles had landed near the village where the two men were meeting. Many more had landed on the southern city of Kandahar, the spiritual and administrative base of the Taliban. The two men were there to decide their response to the war they had suddenly found themselves fighting.

The meeting, revealed to The Observer by sources in a Gulf intelligence agency, did not last long. That was partly due to security concerns: a well-placed Tomahawk cruise missile could have wiped out both of the Pentagon's main targets. Partly it was because the two were in agreement on almost everything. Mullah Omar reaffirmed his support, affection and respect for his Saudi-born friend. Bin Laden replied in kind. The two swiftly reached a decision on tactics. They would jointly resist any aggression, they would work to create and exploit divisions in the coalition ranged against them, and they would exploit the humanitarian crisis - and any civilian casualties - to create global anger against the bombing campaign. Then the two embraced and went their separate ways. They are not thought to have met since.

In 1930, a powerfully built dockside labourer, six feet tall and with one eye, decided there was more to life than loading ships in the ports of his poverty-stricken native province of Hadramaut in Yemen. He packed a bag, bought a place on a camel caravan heading to the newly created kingdom of Saudi Arabia, and set off on a thousand-mile trek to seek his fortune.

The man, who would go on to father a terrorist sought by the military might of the Western world, got his first job as a bricklayer with Aramco - the Arabian-American oil company - earning a single Saudi riyal, about 10p, a day. He lived frugally, saved hard, invested well and went into business himself. By the early 1950s Mohamed bin Laden was employed in building palaces for the House of Saud in Riyadh. He won the contracts by heavily undercutting local firms. It was a gamble that paid off.

Bin Laden's big break came when a foreign contractor withdrew from a deal to build the Medina-Jedda highway and he took on the job. By the early Sixties he was a rich man - and an extraordinary one.

'He couldn't read or write and signed his name with a cross all his life, but he had an extraordinary intelligence,' said a French engineer who worked with him in the Sixties. The engineer remembered that the former labourer never forgot his roots, always leaving home 'with a wad of notes to give to the poor'.

Such alms-giving is one of the fundamentals of Islam. Bin Laden senior was a devout man, raised in the strict and conservative Wahhabi strand of Sunni Islam. Later he was to boast that, using his private helicopter, he could pray in the three holiest locations of Islam -Mecca, Medina and the al-Aqsa mosque in Jerusalem - in a single day. Visiting the former two sites must have been especially satisfying, for it was the contract to restore and expand the facilities serving pilgrims and worshippers there that established the reputation of his company, confirmed its status as the in-house builders of the Saudi ruling clan and made him stupendously wealthy. Though at one stage he was rich enough to bail out the royal family when they fell on hard times, the tatty bag he had carried when he left the Yemen remained on display in the palatial family home. He was killed when his helicopter crashed in 1968.

Mohamed bin Laden had, in the words of the French engineer, 'changed wives like you or I change cars'. He had three Saudi wives, Wahhabis like their husband, who were more or less permanent. The fourth, however, was changed on a regular basis.

The magnate would send his private pilot all over the Middle East to pick up yet another bride. 'Some were as young as 15 and were completely covered from head to toe,' the pilot's widow recently recalled. 'But they were all exceptionally beautiful.'

Bin Laden's mother, Hamida, was not a Saudi or a Wahhabi, but a stunningly beautiful, cosmopolitan, educated 22-year-old daughter of a Syrian trader. She shunned the traditional Saudi veil in favour of Chanel trouser suits and this, coupled with the fact that she was foreign, diminished her status within the family. She was Mohammed bin Laden's tenth or eleventh spouse, and was known as the 'the slave wife'.

Mohamed bin Laden gave even his former wives a home at his palaces in Jedda and Hijaz. Hamida was still married to the millionaire when he died and so, amid a huge family and the solid gold statues, the ancient tapestries and the Venetian chandeliers, this is where Osama bin Laden, Mohamed's seventh son, 'the son of the slave', grew up.

Born in 1957 - the year 1377 of the Islamic calendar - he was 11 when his father died. He never saw much of him. A flavour of the bin Laden household comes from a document provided to the American ABC TV network in 1998 by 'an anonymous source close to bin Laden'. It offers unprecedented insights into Osama's childhood. 'The father had very dominating personality. He insisted to keep all his children in one premises,' it reads. 'He had a tough discipline and observed all the children with strict religious and social code. At the same time, the father was entertaining with trips to the sea and desert,' the document goes on. 'He dealt with his children as big men and demanded them to show confidence at young age.'

Brian Fyfield-Shayler, 69, gave the then 13-year-old bin Laden and 30 other privileged classmates attending al-Thagh school, an élite Western-style Saudi school in Jedda, four one-hour English lessons a week during 1968 and 1969. He described bin Laden as a 'shy, retiring and courteous' boy who was unfailingly polite.

'He was very courteous - more so than any of the others in his class. Physically, he was outstanding because he was taller, more handsome and fairer than most of the other boys. He also stood out as he was singularly gracious and polite, and had a great deal of inner confidence,' said Fyfield-Shayler.

Bin Laden was 'very neat, precise and conscientious' in his work. 'He wasn't pushy at all. Many students wanted to show you how clever they were. But if he knew the answer to something he wouldn't parade the fact. He would only reveal it if you asked him.'

In bin Laden's early teens there was little sign of the fanatic he would become. In 1971 the family went on holiday en masse to the small Swedish copper mining town of Falun. A smiling Osama - or 'Sammy' as he sometimes called himself - was pictured, wearing a lime-green top and blue flares, leaning on a Cadillac.

Osama, then 14, and his older brother Salem had first visited Falun a year before, driving from Copenhagen in a Rolls-Royce flown in from Saudi Arabia. Oddly, they stayed at the cheap Astoria hotel, where the owner, Christina Akerblad, recalled them spending the days out 'on business' and the evenings eating dinner in their rooms. 'I remember them as two beautiful boys - the girls in Falun were very fond of them,' she said. 'Osama played with my two [young] sons.'

Akerblad remembered the wealth she found on display when cleaning the boys' rooms. 'At the weekends we saw they used the extra bed in their rooms to lay out their clothes. They had lots of white silk shirts packaged in cellophane. I think they had a new one for every day_ I never saw the dirty ones. They also had a big bag for their jewellery. They had emeralds and rubies and diamond rings and tie pins.'

Nor was there any sign of incipient fervour in a bucolic summer at an Oxford language school in the same year. Bin Laden and his brothers befriended a group of Spanish girls and went punting on the Thames.

Last month one woman showed a Spanish newspaper a photos of herself and girlfriends - one in hotpants - with three bin Laden boys. Bin Laden, wearing flares, a short-sleeved shirt and a bracelet, looks like any other awkward teenager. His two older brothers look more assured. The young Saudi even once stayed on London's Park Lane. He had forgotten the name of the hotel his Saudi parents had checked into, he told a reporter several years ago, but he recalled 'the trees of the park and the red buses'.

Quite how much of a personal fortune bin Laden had inherited is uncertain. It may well be a lot less than the huge sums (up to $250 million) often cited. The young bin Laden was never interested in money for its own sake. In fact, the very things that had made the father huge riches had begun to trouble the son. The early Seventies were a time of huge cultural change in the Middle East. Oil revenue, the wars with Israel and, above all, increasing contact with the West forced a profound re-examining of old certainties. For most of Mohamed bin Laden's numerous progeny, the answer lay in greater Westernisation and the elder members of the family set off for Victoria College in Alexandria in Egypt, Harvard, London or Miami. But not bin Laden. Like tens of thousands of other young men in the region at the time, Osama had become increasingly drawn to the cool, clear, uncluttered certainties of extremist Islamist ideology.

1974-84: The devout scholar turns holy warrior

After finishing high school in Jedda in 1974, bin Laden decided against joining his siblings overseas for further education. Salim, the head of the clan, had been educated at Millfield, a Somerset boarding school. Another, Yeslam, went to university in Sweden and California. Osama entered the management and economics faculty at King Abdul Aziz University. There are some reports, again unconfirmed, that he married his first wife, a Syrian related to his mother, when he was 17. Salim, the elder brother who had run the bin Laden corporation after their father's death, hoped Osama would take up a useful role in the family business and ensured that a key element of his university course was civil engineering. Bin Laden himself preferred the Islamic Studies component of the course. Later, he was to combine the two in a radically effective way.

At university he heard tapes recorded by the fiery Palestinian-born Jordanian academic Abdallah Azzam, and these had a powerful impact. Azzam's recorded sermons - much like Osama's videotapes today - brilliantly caught the mood of many disaffected young Muslims.

Jedda itself - and King Abdul Aziz university - was a centre for Islamic dissidents from all over the Muslim world. In its mosques and medressas (Islamic schools) they preached a severe message: only an absolute return to the values of conservative Islam could protect the Muslim world from the dangers and decadence of the West. One bin Laden brother, Abdelaziz, remembers Osama 'reading and praying all the time' during this period. Osama certainly became deeply involved in religious activities at university, including theological debates and Koranic study. He also made useful contacts, striking up a crucial friendship with Prince Turki ibn Faisal, a young royal and the future chief of Saudi intelligence services.

But events were to overtake him. In February 1979 Ayatollah Khomeini returned to Iran, overthrew the Shah and established an Islamic Republic. A shudder of excitement and fear ran through Muslims everywhere. In November - and bin Laden was later to refer to this as a crucial, formative event - Islamic radicals seized the grand mosque at Mecca and held it against Saudi government forces. Bin Laden, young, impressionable, increasingly devout but still unsure of himself and his vocation, was stunned. Eventually, after much bloodshed, the rebels were defeated. 'He was inspired by them,' a close friend told The Observer last month. 'He told me these men were true Muslims and had followed a true path.'

Sooner than anyone expected, bin Laden got his chance to follow them. In the last days of the year Soviet tanks rolled into Afghanistan.

It is just 30 miles from the Afghan border to the febrile Pakistani city of Peshawar. The road winds down through the Khyber Pass, through the badlands ruled by the violent and unruly Pashtun tribes, past the relics of battles fought by men from a score of armies - Greek, Arab, Mongol, Sikh and British - and then disappears into the choking mayhem of the city's bazaars.

In the spring of 1980, with yet another army's tanks parked up against the frontier, Peshawar was seething with soldiers, spies, gun-runners, drug dealers, Afghan refugees, exiles, journalists and, of course, the thousands of sympathisers who had flocked from all over the Muslim world to fight the Soviet forces.

One of them, distinctive in his carefully tailored shalwar kameez and English handmade leather boots, was Osama bin Laden. 'I was enraged and went there at once,' he has told interviewers. He was 23 and had found the cause he had been looking for.

Bin Laden's time fighting the Russians was critical. It was during this period that he changed from a contemplative, scholarly young man to a respected, battle- hardened leader of men. And though he had yet to fully develop his extremist ideas, the war in Afghanistan gave him crucial confidence and status.

'He came to the jihad a well-meaning boy and left a man who knew about violence and its uses and effects,' said one former associate interviewed by The Observer in Algeria last year.

According to Gulf intelligence sources, bin Laden's first trip to Peshawar lasted little more than a month. He returned to Saudi Arabia and started lobbying his brothers, relatives and old school friends to support the fight against the Soviet Union. When he went back to Pakistan with the huge sum of money he had collected, he took with him several Pakistanis and Afghans who had been working in the bin Laden company. They set about organising an office to support the Mujahideen and the Arab volunteers.

Within weeks of his first arrival in Pakistan, Osama had been introduced to Abdullah Azzam, the charismatic preacher whose taped sermons had made such an impression at university. The pair got on well. The energy, administrative talent and contacts of the young Saudi complemented the profound Islamic knowledge and commitment of the older man. Azzam, then 38, was a founder of the Hamas guerrilla group on the occupied West Bank and Gaza and thus had the experience to run a major organisation. For the next two years, bin Laden commuted between the Gulf and Pakistan. All the time his relationship with Azzam grew stronger.

At first, bin Laden kept a low profile. Journalists in Pakistan at the beginning of the Eighties remember hearing stories about the 'Saudi sheikh' who would visit wounded fighters in the university town's clinics, dispensing cashew nuts and chocolates. The man would note their names and addresses and soon a generous cheque would arrive at their family home. Such generosity - perhaps learnt from his father with his wad of notes for the poor - is something that almost all who have fought for or alongside bin Laden mention.

Some - such as one former al-Qaeda member interviewed by The Observer in Algeria - speak of $1,500 donations for marriages, others talk of cash doled out for shoes or watches or needy relatives. His followers say that such gifts bind them to their emir as effectively as the bayat or oath that many of them swear.

Sometimes his time was as valuable as his money. One former Afghan Mujahideen remembered how he had befriended bin Laden because he wanted to learn Arabic. The young Saudi spent many hours tutoring him, in the language of the Koran. Despite his tough reputation, he was still the quiet and softly spoken young man his teachers had remembered.

By 1984, bin Laden and Azzam had rented a house in the Peshawar suburb of University Town and established a logistics base for the thousands of Arab fighters arriving in the city. It was called Beit-al-Ansar (the House of the Faithful).

'Bin Laden ... would receive the Arab volunteers, vet them and then send them on to the various Afghan factions,' said one former associate. The venture was condoned by the CIA, the powerful Pakistani intelligence service, the ISI, and the Saudi agency, the Istakhbarat, soon to be headed by his old friend Prince Turki. None, though, gave bin Laden any American aid.

Beit-al-Ansar was on Syed Jalaluddin Afghani Road, a quiet backstreet full of bougainvillea and large houses built for the local élite. By the mid-Eighties the area had become a centre for the Afghan resistance. All the leaders of the various groups had offices there. There were two newspapers - one published by Abdullah Azzam and bin Laden. There was even a 'neutral' office, in a building rented by bin Laden, where Mujahideen groups could thrash out their differences.

Conditions were spartan - almost deliberately so. The volunteers, and bin Laden too, used to sleep a dozen to a room on thin pallets laid out on the hard floor of their offices. According to former associates, bin Laden used to sit up late into the night discussing Islam and Middle Eastern history. The young Saudi was yet to develop his radical ideology. Instead his views were a mixture of half-remembered history and heavily skewed, and often ill-informed, analyses of current affairs. Bin Laden was particularly angry about what he called the betrayal of the Arabs by the British after the First World War. He also criticised the Saudi royal family, saying they had exploited the Wahhabi to gain power.

At other times bin Laden would lead religious debates among the volunteers. Many centred on Sura Yasin - the key passage known as 'the heart' or 'the source' of the Koran, when Muhammad the prophet reveals the message and the task that God has entrusted him with. 'He used to talk a lot about the warriors of Islamic history such as Salauddin [Saladin],' said one associate. 'It was as if he was preparing himself.'

1984-90: The battle-hardened fanatic tastes power

Just over the border from Peshawar into Afghanistan is the small village of Jaji. In 1986 the Soviet garrison there was under heavy attack from the resistance. One morning a senior commander was sheltering from a bombardment by Russian mortars in a bunker when a tall Arab dived through the door as explosions shook the earth. It was bin Laden. His 'ground war' had started.

In the mid-Eighties - partly due to a massive increase in American funding for the resistance - the war in Afghanistan intensified. Thousands of young Muslims were filling the university town dormitories. Though their motives were varied - some came for adventure, camaraderie or to escape from the law - most came for one reason only. 'I went to fight for my faith,' one Egyptian former mujahid told The Observer in London last year.

Through the summer of 1986 bin Laden was in the centre of the fighting around Jaji. Once, with a force of about 50 Arabs, he fought off a sustained assault by Soviet helicopters and infantry. 'He was right in the thick of it,' Mia Mohamed Aga, a senior Afghan commander at the time and now with the Taliban, said last week. 'I watched him with his Kalashnikov in his hand under fire from mortars and the multiple-barrelled rocket launchers.'

Over the next three years, bin Laden fought hard, often exposing himself to extreme physical danger. One leader of the hardline Hezb-i-Islami group said he remembered bin Laden holding a position under heavy bombardment after being surrounded by Soviet soldiers. At least a dozen other senior veterans, many of whom are now opposed to bin Laden, corroborate the accounts of his combat role. They all mention his lack of concern for his own safety. The devout boy was turning into the holy warrior.

Bin Laden's fanaticism was shared by his men. 'I took three Afghans and three Arabs and told them to hold a position [during the battle for the eastern city of Jalalabad in 1989]. They fought all day, then when I went to relieve them in the evening the Arabs were crying because they wanted to be martyred. I told them that if they wanted to stay and fight they could. The next day they were killed. Osama said later that he had told them that the trench was their gate to heaven.'

Bin Laden shared more than their fanaticism. 'You never knew he was so rich or the commander of everyone. We used to all sit down together and eat like friends,' another veteran said.

On some occasions he took it on himself to broker truces between Afghan factions. His self-assumed responsibility for supplying the Mujahideen continued. CIA sources estimated he was bringing in at least $50m a year for the jihad. One veteran said that during the fighting for Jalalabad, he had seen the Saudi by a roadside, caked in mud, organising food, boots and clothes for the Mujahideen.

However, there were tensions with those who did not share his hardline Islamism. Said Mohamed, another Afghan veteran, said bin Laden had refused to deal with him during one battle because he was clean shaven. Bin Laden was learning the power of the media too. Reports of his exploits, by Arab journalists based in Peshawar, were published throughout the Middle East. They brought him a flood of recruits as well as a respect and a status that he had never had before. The 'son of the slave' was now a sheikh himself.

In 1979 the Soviet forces pulled out of Afghanistan and left a puppet government in Kabul. The Mujahideen were now battling other Afghans. - and each other. There was little to keep the thousands of battle-hardened fighters of the Arab 'international brigade' in Afghanistan. Many left to continue their jihad in their home countries. Bin Laden, hating the internecine squabbles, was one.

'He was very frustrated by it all. He is a very honest, very clean man, and when he saw the Arabs were arguing among themselves he was sickened by it,' said Jammal Nazimuddin, a former fighter. 'He used to tell them that they had defeated the Soviet empire alone because they were united and Allah had blessed them. If they were not united, he said, they could not do Allah's will.'

Bin Laden, aged 33, went home.

Continued:

The making of bin Laden: Part 2