By Virginia Pietromarchi

Foreign Minister Javad Zarif’s attempt to resign, reflects a long-time rivalry between hardliners and moderate factions within Iran’s politics, according to Iran experts.

Despite President Hassan Rouhani‘s rejection of Zarif’s resignation, observers believe that the foreign minister’s unexpected move was the result of an intensifying internal power struggle in Iran that is far from over.

“Zarif’s resignation has exposed the political faultline between competing political factions in the country,” said Luciano Zaccara, professor of Gulf Politics at the Qatar University Gulf Studies Center.

The confrontation is between moderate forces within the government, including Zarif, and hardliners who dominate Iran’s Revolutionary Guard Corps (IRGC), a military force directly under the control of Supreme Leader Ayatollah Ali Khamenei.

Zarif has been the top Iranian official working to improve relations between the Islamic Republic and Western countries.

But hardliners took a fierce stance against the government’s effort to salvage the 2015 nuclear deal signed with the West to curb Iran’s nuclear activities in exchange for sanctions reliefs.

After US President Donald Trump withdrew from the deal in May and imposed a second round of sanctions, Iran plummeted into a severe economic crisis.

The currency went into freefall, losing around 70 percent of its value against the dollar.

That and Europe’s failure to take tangible steps to deflect the economic pressure have fueled the hardliners’ criticism against Zarif for the concessions he gave to the United States and the European Union without securing benefits for Tehran.

The political cracks within Iran’s political factions span Iran’s involvement in the war in Syria, its alleged role in assassinations on EU soil, and the fight for a more transparent financial system.

Confrontation over Syria

When Khamenei met Syria’s President Bashar al-Assad on Monday alongside Qasem Soleimani, the head of the IRGC, the foreign minister’s absence was noteworthy.

Iranian media reported that Zarif’s exclusion from the Assad meetings pushed the minister to announce his resignation.

“Zarif’s absence showed how insignificant the role of the foreign minister is in defining Iran’s foreign policy in Syria, which is dominated by the revolutionary guards,” said Zaccara.

“With his resignation, even if not accepted, Zarif wanted to make the point that the foreign minister needs to be in charge of the country’s foreign policy.”

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A further point of friction between moderates and hardliners over Syria concerns if and how Iran should respond to the Israeli attack on Iran’s military installations on January 21, according to Brookings visiting fellow and Iran expert Ali Fathollah-Nejad.

“There are increasing considerations among some Iranian security circles that Iran should respond,” Fathollah-Nejad said.

“If this is the plan, it would strike a blow to what Zarif is trying to achieve given that any confrontation with Israel would jeopardise EU support for Iranian relations.”

Iranian actions in EU

Iran’s internal power struggle stretches beyond regional boundaries to reach European soil.

France accused Iran of plotting a foiled bomb attack on June 30 against an exiled opposition group’s rally while Rouhani was in Europe to salvage the nuclear accord.

A few months later, the Netherlands condemned Iran for the assassinations of two Dutch nationals of Iranian origin.

The accusations came just after the EU announced its intention to set up a financial mechanism to facilitate trade with Iran despite US sanctions.

“Why is that precisely at the time Iran was fostering relations to salvage the nuclear deal, there were attempted assassinations from the Iranian side on European soil?” questions Fathollah-Nejad.

While the EU accused the Ministry of Intelligence, Fathollah-Nejad suggests that there are numerous Iranian intelligence services affiliated to hardline elements that could have had the interest to sabotage Zarif’s engagement with the EU to save the nuclear deal.

A battle within domestic policy

As part of Rouhani’s attempt to reduce Revolutionary Guard influence over the country’s economy, the Iranian parliament passed a bill on Sunday requiring tax-exempt para-governmental organisations, including the IRGC, to pay taxes.

While the bill has not received the Guardian Council’s approval, the Rouhani administration is trying to send a message that it wants more transparency from the IRGC, according to Zaccara.

“Rouhani wants to reduce the Revolutionary Guard’s internal influence by making them more accountable. In this way he will also limit the IRGC’s capacity to stick on the wheel of Iran’s international commitments,” Zaccara told Al Jazeera.

The IRGC is believed to control a notable share of the Iranian economy either directly or indirectly through everything from dam construction to transportation.

Accountability and transparency are also at the core of Rouhani’s battle to adopt the remaining two out of the four bills needed to meet standards set by the Financial Action Task Force (FATF) .

The FATF is an international body that develops policies to combat money laundering and the financing of violent organisations.

If Iran adopted the remaining bills, it would make the country’s financial system more transparent and pave the way for the country to establish international banking ties, but the bills are stuck in review.

“If these bills are implemented they would pose a threat to the political interests of the IRGC as it would make the whole financial system more transparent,” said Fathollah-Nejad. “But if it’s not implemented, it would jeopardise European and Iran relations.”

The foreign minister has implicitly accused hardliners of being engaged in money-laundering activities he said were prevalent in Iran.

The future scenario

“I believe accepting your resignation would be against the benefit of the country, so I reject it,” Rouhani said in a letter to Zarif published in Iranian media on Wednesday.

Soleimani also expressed his full support of Zarif, calling the minister the main person in charge of Iranian foreign policy and said he was supported by the Supreme Leader.

“The broad support for Zarif, including by Soleimani, suggests that this episode has empowered the Rouhani administration in general, and the foreign minister in particular,” said Mohammad Ali Shabani, Iran Pulse Editor at news portal Al-Monitor.

“While factional infighting won’t end, it is likely that both Rouhani and Zarif will now be able to press their issues with more fortitude and strength.”