Iran warns US, Israel of revenge after parade attack

LONDON, Sept 24 (Reuters): The deputy head of Iran's Revolutionary Guards warned US and Israeli leaders on Monday to expect a "devastating" response from Tehran, accusing them of involvement in an attack on a military parade in the city of Ahvaz.

"You have seen our revenge before ... You will see that our response will be crushing and devastating and you will regret what you have done," Hossein Salami said in a speech before the funeral of the victims broadcast live on the state television.

Thousands of people packed the streets of the southwestern Iranian city of Ahvaz to mourn the victims of Saturday's assault that killed 25 people, including 12 members of the elite Revolutionary Guards.

Many chanted "death to Israel and America".

The coffins, wrapped in the flag of the Islamic Republic, were carried by the mourners.

Many held pictures of a four year old boy killed in the attack, one of the worst against the most powerful military force of the Islamic Republic.

Four assailants fired on a viewing stand in Ahvaz where Iranian officials had gathered to watch an annual event marking the start of the Islamic Republic's 1980-88 war with Iraq.

Soldiers crawled on the street to avoid bullets. Women and children fled for their lives.

Top Iranian leaders also blamed the United State's Gulf Arab allies for the bloodshed that struck a blow at the heart of its security establishment.

The accusation will almost certainly antagonize Iran's regional foe Saudi Arabia. The oil superpowers are waging a war for influence across the Middle East, backing opposite sides in Syria, Yemen, Iraq and Lebanon.

The United Arab Emirates, a close ally of Saudi Arabia and Washington, rejected Iranian allegations alluding to its involvement in the violence.

Speaking at the funeral ceremony, Defence Minister Amir Hatami warned the "terrorists" to expect the revenge of the Iranian nation.

Iran has been relatively stable compared to Arab neighbors still grappling with political and economic upheaval triggered by 2011 uprisings.

The intelligence minister, Mahmoud Alavi, said a large network of suspects had already been arrested in connection with the attack, the judiciary's news agency Mizan reported. He did not elaborate.

An AP report adds: Hard-liners batter President Hassan Rouhani over his faltering nuclear deal, sending his popularity plummeting.

Women in the streets film themselves removing their mandatory headscarves, or hijabs, in protest. Meanwhile, state television airs moments from a major corruption trial.

Welcome to the topsy-turvy world of Iranian politics.

Ahead of the 40th anniversary of Iran's Islamic Revolution, the country's government is allowing more criticism to bubble up to the surface. Analysts say that may serve as a relief valve in this nation of 80 million people, which already has seen widespread, leaderless protests rock the country at the start of the year.

But limits still clearly exist in Iran's Shiite theocracy, ensnaring lawyers, activists and others in lengthy prison terms handed down in closed-door trials. And the frustration people feel may not be satiated by complaining alone, especially as US sanctions on Iran's oil industry take effect in November.