* "No politics" order to Guards gives space for Rouhani
* Guards have grown into omnipresent force
* Guards may be rewarded for indulging new nuclear talks
By William Maclean and Marcus George
DUBAI, Sept 19 Iran's clerical leadership has told security hardliners to stay out of politics, in effect instructing them not to wreck the new centrist government's attempt to solve an intractable nuclear dispute with West.
If the message to the Revolutionary Guards from Supreme Leader Ayatollah Ali Khamenei and new President Hassan Rouhani was meant as an admonition, however, it was a friendly one.
The request was delicate since the military force has accumulated great economic and political power in recent years and is omnipresent in the life of the nation.
Such is the Guards' influence in political, social and economic affairs that they could disrupt any rapprochement with the West if they felt this would damage their interests.
The 125,000-strong Iranian Revolutionary Guards Corps (IRGC) has a military budget that is believed to dwarf that of the regular armed forces. But much of its much of its clout comes from positions held by former members in parliament, in the cabinet, as provincial governors and on Khamenei's staff.
Khamenei told a meeting of Guards personnel on Tuesday: "There's no need for the IRGC to be active in the political arena".
A day earlier the gathering was told by Rouhani - a centrist cleric who defeated more conservative candidates in a June election - that the late founder of the Islamic Republic, Ayatollah Ruhollah Khomeini, had recommended the military stay out of politics. "The IRGC is above and beyond political currents, not beside them or within them," Rouhani said.
However, Khamenei's message was twinned with praise for the Guards' business and other non-military roles, a hint that it may be rewarded eventually for indulging Rouhani's attempt at solving the nuclear standoff and ending economic sanctions.
Rouhani has called for "constructive interaction" with the world and the head of Iran's nuclear energy organisation said on Wednesday that he saw "openings" on the nuclear issue.
While Iran says its nuclear programme is peaceful, the West suspects it is aimed at developing nuclear weapons and has imposed crippling economic sanctions on Tehran.
To many, Khamenei's comments implicitly recognised the Guards' ability to interfere in any perceived weakening of Iranian resolve in pursuing its nuclear programme.
Conservative leaders of the Guards opposed many policies of reformist president Mohammad Khatami, who served from 1997 to 2005, and helped to scuttle his boldest initiatives.
The Guards and its volunteer paramilitary branch, the Basij, were also instrumental in suppressing huge street protests that followed the disputed re-election of hardline President Mahmoud Ahmadinejad in 2009.
Farhang Jahanpour of Oxford University's Faculty of Oriental Studies said the main domestic obstacle Rouhani faces was the attitude of hardliners represented by the Guards who call the United States and its allies "world arrogance".
"They have been the ones most insistent about not surrendering to 'world arrogance' and upholding revolutionary values. So both Rouhani and Khamenei feel they have to keep them on their side by giving them something in return," he said.
"As long as the Guards see that the country is not totally capitulating to the West and as far as their economic gains are safe, they would keep quiet and will give the government room to find an honourable compromise with the West."
According to one Iranian journalist in Tehran, who spoke on condition of anonymity, Khamenei had calculated it was in his interests to give negotiations with Washington a chance if it resulted in an easing of sanctions.
But at the same time he was worried about "the great power and influence that the IRGC has over everything in Iran ... because they could any time make a coup against him (Khamenei)whenever they find the Leader threatening for their interests."
That may be an extreme view. Hardliners seem to have little reason yet to worry about the nuclear issue, as Western diplomats see no sign of Iran slowing its programme.
The last report by the United Nations nuclear watchdog showed Iran further expanding its uranium enrichment capacity by installing more than 1,800 additional old generation centrifuges since the previous report in May.
Then there are personal loyalties. The Guards report directly to Khamenei, and many commanders owe their careers to him.
An example of how close the Guards are to the heart of power surfaced this week when the Iranwire website published photographs of a funeral wake for the mother of the head of the Guards' shadowy Quds force, Qassem Soleimani.
Almost the entire military and political elite turned out to pay their respects, including senior cabinet members, centrist politicians and the Guards' intelligence chief. As well as a condolence message from Khamenei, there was also one from former president Khatami, the website said.
Western diplomats believe Soleimani is responsible for the Guards' alleged role in the Syrian civil war.
General concern about the spreading influence of the Guards is not hard to find among Iran watchers. Some wonder if the Guards dislike economic sanctions as much as everyone else.
Imposed mostly by Western countries over Iran's nuclear activities, sanctions have kept Western oil firms away from Iran's energy sector, leaving space for Guards firms to win the lucrative contracts.
A HONEYMOON PERIOD?
The Guards' interests, which grew strongly in the volatile, factionalised political environment under Ahmadinejad, may have to be placated in some way if Rouhani is to make headway in any fresh nuclear talks.
Siavush Randjbar-Daemi, an Iran expert at the University of Manchester, said Khamenei was keen to give Rouhani the space to pursue effective negotiations with the West.
"What we're seeing is a reshuffle in terms of authority and power in Iran - an attempt to put the house in order," he said of Khamenei's instructions about avoiding politics.
He added there was a new optimism inside the ruling system following the election that lessened the need for the Guards to be involved in politics. "The last administration saw a breakdown in bureaucracy and a breakdown of boundaries. No-one knew what the IRGC was up to.
"Khamenei is redressing the lines and carving out some authority for Rouhani .... It's his honeymoon period."