* Former president says Iran faces unprecedented pressure
* Says government response to sanctions inadequate
* Says splits within ruling elite damaging to Iran
TEHRAN, Sept 14 (Reuters) - Veteran Iranian politician Akbar Hashemi Rafsanjani criticised President Mahmoud Ahmadinejad on Tuesday for failing to counter the impact of sanctions -- the latest sign of division within Iran's ruling elite.
Rafsanjani, head of a powerful clerical body, said the Islamic Republic was under unprecedented global pressure and said the government was wrong to dismiss the sanctions as no threat to the economy.
"Gentlemen, you should be vigilant and careful. Do not downplay the sanctions ... people should not be tricked," Rafsanjani told the Assembly of Experts, a body that can dismiss or appoint Iran's Supreme Leader but which has not exerted that power so far.
Without naming the president -- who has called the sanctions "pathetic" and no more effective than a "used handkerchief" -- Rafsanjani was aiming his comments at Ahmadinejad to whom the cleric lost in a 2005 presidential election.
"Iran has such a big capacity that it is able to overcome (the sanctions), but I am doubtful that these capacities are being utilised in a proper way," he said in his opening address to the two-day meeting of the assembly.
"We have never had such intensified sanctions and they are getting more and more intensified every day. Wherever we find a loophole, they (Western powers) block it," he said.
Led by Washington, the new sanctions target financial services and Iran's energy sector, making international transactions harder and hitting Iran's ability to import gasoline and secure foreign investment.
The measures are aimed at pressuring Tehran to curb its nuclear activities which the West fears might be aimed at making a bomb. Iran says its atomic ambitions are purely peaceful.
Normal Iranians fear the sanctions will mean higher prices and a hit to the economy and jobs.
The criticism from Rafsanjani -- who has expressed sympathies with Iran's reformist movement -- comes after similar comments from hardliners in parliament and the judiciary.
Divisions within the ruling elite have become increasingly evident in recent months as opposition protests over Ahmadinejad's re-election in June 2009 have died down.
Most recently, Ahmadinejad angered hardliners by appointing four close allies to new foreign policy posts, sidelining the Foreign Ministry and snubbing calls to sack his controversial chief of staff whom he made Middle East envoy. [ID:nLDE67M0YD]
The country's most powerful figure, Supreme Leader Ayatollah Ali Khamenei, backed Ahmadinejad's re-election and has publicly ordered the ruling elite to support the government.
"We are facing attempts to create division," Rafsanjani said, warning that the in-fighting could damage the Islamic revolution, in which he was one of the closest allies of its late founder Ayatollah Ruhollah Khomeini.
"Inside the country we should be vigilant to not let unity be harmed. Those who think they can benefit by creating division ... they are on a Satanic path."
After last year's vote that was followed by the worst unrest since the 1979 revolution, Rafsanjani on many occasions criticised the arrest of opposition supporters but he has been silenced in the past months after Khamenei publicly accused the opposition of being backed by Iran's foreign enemies.
Rafsanjani used to lead Tehran Friday prayers at least once per month over the last three decades, has not done so since Aug. 2009 without giving any reason.
Editing by Samia Nakhoul