UPDATE 6-Iran president rejects resignation of moderate ally Zarif

Iran's President Hassan Rouhani on Wednesday rejected his foreign minister's resignation as "against national interests", bolstering a moderate ally long targeted by hardliners in factional struggles over the 2015 nuclear deal with the West. Foreign Minister Mohammad Javad Zarif, a U.S.-educated veteran diplomat, announced his resignation on Monday in what an aide said was anger at being excluded from meetings that day with Syria's president, who was visiting Tehran.

Two days later, he was back with his position strengthened by the president's endorsement as well as a chorus of support from moderate lawmakers, a senior Revolutionary Guards commander and, implicitly, Supreme Leader Ali Khamenei. "As the Supreme Leader has described you as a 'trustworthy, brave and religious' person in the forefront of resistance against widespread U.S. pressures, I consider accepting your resignation against national interests and reject it," Rouhani said in a letter published on state news agency IRNA.

Senior Revolutionary Guards commander Qassem Soleimani said Zarif, who helped craft the pact that curbed Iran's nuclear programme in return for sanctions relief, was the main person in charge of foreign policy and he was supported by Khamenei. The message of support came at a time when the clerical establishment is feeling vulnerable amid growing pressure from the United States, so they need to promote unity and keep the reform wing on their side.

Iranian leaders reached the conclusion that Washington wants regime change after U.S. President Donald Trump withdrew from the nuclear deal last year. In many of his speeches at the time Khamenei stressed that unity is paramount, and that remains his position as Tehran faces reimposed sanctions.

PROTESTS Discontent with sky rocketing inflation and unemployment exacerbated by sanctions have triggered waves of protests. Iranians who were hoping the nuclear deal would bring relief are now calling for Rouhani and clerical leaders to step down.

Zarif’s sudden resignation after months of pressure from hardliners was prompted by his indignation of being excluded from meetings in Tehran between Syrian President Bashar al-Assad and top Iranian officials, an aide said. Syrian state news agency SANA said on Wednesday that Syrian Foreign Minister Walid Mouallem had received a phone call "from his Iranian counterpart" Zarif to follow up on Assad's "historic visit" to Tehran.

"Zarif wanted to resign for a long time and actually he tried several times in the past. But for many reasons, including lack of a replacement, his attempts failed," said a senior official. "I believe that is why Zarif decided to go public and resign. It was a cry for help. To tell officials and people that his hands were tied."

Zarif's departure would have deprived Iran of its most skilled diplomat, a patient negotiator able to strike a landmark deal with often hostile Western powers. Hardliners also need him to work with countries such as India and China to find sways to ease the impact of sanctions.

His knowledge of the West - gained during years of studying in the United States and then representing Iran at the United Nations - helped him build a rapport with American officials despite decades of animosity between Washington and Tehran. After U.S. President Donald Trump abandoned the nuclear deal in May last year and reimposed U.S. sanctions, Zarif came under fire from opponents who accused him of selling out his country.

It was unclear whether Zarif's resignation announcement, and the expressions of support which followed, were orchestrated. But allies said the last two days' events would give him political ammunition against hardliners. "There is no one to replace Zarif as the foreign minister. And the establishment knows that," said Zarif's ally, speaking on condition of anonymity.

"The establishment needs Zarif and Zarif needs the establishment's support. And the reactions after his announcement, showed the consensus over the importance of having him as Iran's foreign minister," the ally added. SCHISM

Khamenei, who stays out of day to day politics, has not publicly commented on Zarif's resignation. But it is almost certain that Rouhani would have needed a green light from the man with ultimate authority in Iran. Zarif's move thrust the schism between Iran's hardliners and moderates into the open, effectively challenging Khamenei to pick a side.

Zarif gave no specific reasons for his resignation. But allies said he had quit after coming under increasing pressure over the nuclear deal and other issues. "He resigned because he loves his country. Because some extremists inside Iran, could not tolerate Zarif's achievements in foreign policy and were blocking him in every turn," said a source close to Zarif and the office of the Supreme Leader.

"No matter how hard Zarif tried, he could not resolve some problems because they needed the approval of parliament, Guardian Council and so on." The council vets legislation passed by parliament for compliance with Iran’s constitution.

On Wednesday, Zarif thanked Iranians for their support. "As a modest servant I have never had any concern but elevating the foreign policy and the status of the foreign ministry," he said in an Instagram post. After Rouhani's announcement, Zarif signed two agreements in Tehran with Armenia, television footage showed, continuing his duties as Iran's top diplomat.

(Reporting by Bozorgmehr Sharafedin and Parisa HafeziWriting by Michael GeorgyEditing by Andrew Heavens)