(Repeats story from Jan. 28)
* First Grand Master to step down in centuries
* Knights founded in 1048 to help pilgrims to the Holy Land
* Resignation followed clash with Vatican
* Incident mirrors conservative-progressive split in Church
By Philip Pullella
VATICAN CITY, Jan 30 (Reuters) - On the afternoon of Jan. 24, a black BMW pulled out of a 16th century palace in Rome, crossed the Tiber River and headed for the Vatican, a short trip to end a brazen challenge to the authority of Pope Francis.
Inside the car was 67-year-old Englishman Matthew Festing, the head of an ancient Catholic order of knights which is now a worldwide charity with a unique diplomatic status.
Festing was about to resign, the first leader in several centuries of the Order of Malta, which was founded in 1048 to provide medical aid for pilgrims in the Holy Land, to step down instead of ruling for life.
The move was aimed at ending a highly-public spat between Festing and the reformist pope over the running of the chivalric institution. The weeks-long conflict had become one of the biggest internal challenges yet to Francis' efforts to modernize the 1.2 billion member Roman Catholic Church.
At issue was the Order's reaction to the discovery that condoms had been distributed by one of its aid projects in Myanmar. The Order had fired its Grand Chancellor, Albrecht Freiherr von Boeselager, whom it held responsible for the condom distribution. Von Boeselager declined to comment for this article.
Though condom use goes against Catholic teaching, the Vatican had ordered an investigation into the firing of von Boeselager. It subsequently publicly castigated Festing, who had refused to cooperate with the investigation.
Backing down, Festing -- a former Sotheby's art auctioneer -- gave a hand-written resignation letter to Francis in the pope's private residence, according to a senior Vatican source. Festing, who has the title of prince, declined an interview request.
Instead of quelling the conflict, however, Festing's resignation was followed by yet another challenge to Francis' authority -- led by vocal pope critic American Cardinal Raymond Leo Burke, according to Vatican and Knights sources.
In particular: Burke tried to convince Festing to withdraw his resignation and keep fighting the pope, these sources say. On Saturday, the Knight's Sovereign Council accepted Festing's resignation and re-instated von Boselager, a clear defeat for Burke.
Burke declined to comment for this article.
The tussle suggested Francis is still battling to consolidate his power over the Church almost four years into his tenure, Vatican insiders say.
Beyond a fight over condoms, the clash pointed to lingering divisions between the Church's conservatives and more progressive factions who support the pope's reformist agenda, they add.
Francis is trying to make the Church less dogmatic and more welcoming to whose who have felt excluded, such as homosexuals and the divorced.
"While this whole saga was an internal matter that probably should have stayed that way, it metamorphosed into a clash that showed the divide between conservatives and progressives," said Andrea Tornielli, author of several books on Pope Francis.
The Vatican declined to comment on the clash and on Pope Francis' efforts to consolidate his power.
It directed Reuters to two public statements. One, on Dec. 22, relates to the Vatican order to investigate the firing of von Boeselager. The second, on Jan. 17, followed a pledge by Festing on the Knights' web page not to cooperate with the Vatican. It decried his resistance and ordered members of the order to cooperate.
GERMAN ARISTOCRAT
The all-male top leaders of the Knights of Malta are not clerics, but they take vows of poverty, chastity and obedience to the pope.
A German aristocrat whose father participated in a failed plot to kill Hitler in World War Two, von Boeselager was fired by Festing in December, and accused of having allowed the use of condoms while he was head of the Knights' global humanitarian projects.
Festing fired him in Burke's presence, arguing that the German had hidden the condom use from the order's leaders when he was named Grand Chancellor, according to Knights and Vatican sources.
Immediately, the firing set off the conflict between the Knights' hierarchy and the Vatican.
Von Boeselager , a devout Catholic, said in a statement on Dec. 23 that he was fully behind Church teachings. He closed two projects in the developing world when he discovered condoms were being distributed but kept a third running in Myanmar for a while because closing it would have abruptly ended all basic medical services to poor people.
The Church does not allow condoms as a means of birth control and says abstinence and monogamy in heterosexual marriage is the best way to stop the spread of AIDS.
In the same statement, von Boeselager said Festing and Burke told him the Vatican wanted him to resign and that there would be "severe consequences" for the Order if he did not.
The Vatican denied, in a letter from its secretary of state to the Order and seen by Reuters, that it had mandated the resignation, saying it had told the Knights the pope wanted a solution through dialogue.
The German said his sacking was against the Knights' constitution and appealed to the pope, who ordered the investigation.
Festing refused to cooperate, issuing a series of increasingly strident public statements. In one, he called the papal commission that was investigating the firing "legally irrelevant".
In a Jan. 14 confidential letter to the top echelons of the order and seen by Reuters, Festing wrote: "In refusing to acknowledge this group of people's jurisdiction, I am trying to protect the order's sovereignty".
The institution has the status of a sovereign entity, maintaining diplomatic relations with over 100 states and the European Union and permanent observer status at the United Nations.
The pope was irritated by Festing's defiant stand, a senior Vatican source said, and the Vatican shot back with a public statement ordering the Knights to obey.
After that public order, Festing changed his tune and resigned in the pope's residence a week later.
Festing's resignation came as a shock for many inside the Knights: some of them told Reuters it was akin to the resignation of Pope Benedict in 2013.
Four sources said that for many others in the order, it came as a relief. They feared the clash was damaging the image of the institution whose 13,000 members, 80,000 volunteers and 20,000 paid medical staff help the neediest around the world.
The day after Festing handed his resignation to the pope, Cardinal Burke drove to the order's headquarters from his apartment near the Vatican and sought to persuade Festing to withdraw his resignation, a source from the Vatican and one from the Knights said.
Burke declined to comment on his meeting with Festing.
Burke has long been leading challenges against the pope. Pope Francis demoted him from a top Vatican job in 2014 with no official explanation and assigned him to be the "patron" of the Order of Malta.
Such "patron" positions are usually given to older cardinals after they retire at 75. Burke was only 66 then and the demotion was widely seen as a sign of the pope's irritation with the cardinal's constant sniping over Francis' reforms.
In particular, Burke has contested moves by the pope that would allow Catholics who have divorced and re-married outside the Church without an annulment to return to the sacrament of communion. Burke declined to comment on his demotion.
Since the demotion, Burke has become even more of a rallying point for conservatives, flying around the world to give lectures to conservative groups and often giving interviews criticising the pope's decisions.
In November, he led a rare public challenge to the pope with three other cardinals who accused the pontiff of sowing confusion on important moral issues such as that of communion for the divorced.
Burke later said in an interview that if the pope did not respond to their letter, the cardinals might need to "correct" the pope themselves for the good of the Church.
The Vatican did not comment on the uprising at the time but many of the pope's supporters publicly criticised the four cardinals.
The pope will now appoint a "pontifical delegate" to help run the order, at least until elections can be held for a new Grand Master.
In a personal letter to the Sovereign Council on Jan. 27 and seen by Reuters, Francis made clear that the Vatican did not want to interfere with the Order's sovereignty but said his delegate would seek to "renew the spirituality of the Order, specifically of those members who take vows."
(Editing by Mark Bendeich, Philippa Fletcher and Alessandra Galloni)
