Vatican City (Reuters) - When he was elected a year ago, Pope Francis promised to shake up the bureaucracy of the world's smallest country. He has started at the top - curbing the once-overarching role of the secretary of state.

The cardinal who oversees the Vatican's relations with other countries has served as the top ranking official in the Holy See's bureaucracy since the 17th century. And in recent decades the office accumulated increasing authority over finances and job hires, taking on roles analogous to prime minister and chief of staff in the papal court, as well as that of top diplomat.

During the reign of retired Pope Benedict, critics blamed then Secretary of State Cardinal Tarcisio Bertone for failing to prevent the missteps and scandals that marred the German pontiff's eight years as Roman Catholic leader.

Now, however, Francis is reducing the power of the job, reshaping the department as one primarily involved in diplomacy like the U.S. State Department or foreign ministries elsewhere, stripping it of authority over finances and giving it a smaller role in internal matters.

He has chosen a frugal, publicity-shy career diplomat - Cardinal Pietro Parolin - who, according to those who know him, is the antithesis of his most recent predecessors in the post.

Bertone, and before him Cardinal Angelo Sodano, were driven around in limousines with their aides. Parolin walks alone in and around the Vatican.

In one of his first interviews, Parolin, whom a Catholic newspaper described as being "alien to clerical exhibitionism," said Vatican bureaucrats should be "more evangelical".

Redefining the secretary of state's role is a central part of Francis's agenda to clean up the Curia, the administration of the Holy See, following a series of scandals in 2012, the last full year of Benedict's pontificate.

A new department overseeing Vatican finances will now report directly to the pope. To head it, Francis chose an Australian who had never worked in Rome, Cardinal George Pell, a man far removed from the Italian-dominated Curia.

Insiders say that in another potential move aimed at power sharing the pope may also create an office of a coordinator of the Curia, a sort of chief of staff.

"SYSTEMIC DISORDER"

The ageing and frail Benedict was unable to deal with the internal upheaval that engulfed his papacy. In 2013 he became the first pope in 600 years to resign.

The so-called "Vatileaks" affair - in which Benedict's butler leaked sensitive documents alleging corruption in the Curia - was on the minds of many cardinals as they entered the Sistine Chapel in the conclave that elected Francis a year ago.

The non-Italian cardinals, in particular, believed that reports of turf battles and infighting in the central administration of the 1.2 billion member Church were undermining its credibility in dealing with issues such as sexual abuse of minors by clerics.

"It is not an exaggeration to say that there was a systemic disorder in the Curia under Benedict," said Alberto Melloni, a Church historian and director of the John XXIII Foundation for Religious Studies in Bologna.

"The view of cardinals who came to Rome to elect a new pope last year was of a Secretariat of State that had accumulated too much power over the years," said a top Vatican official who spoke on the condition of anonymity because he was not authorised to discuss the conclave.

During Benedict's papacy, the Curia was broadly divided into factions: supporters of Bertone and of his predecessor Sodano.

Sodano, a longtime diplomat, had served as secretary of state from 1991 to 2006. In the final years of the papacy of John Paul II, who died in 2005, Sodano essentially ran the Church as the pontiff's health deteriorated.

Bertone had no experience in diplomacy when he replaced Sodano in 2006. He had a disproportionate influence on internal Vatican affairs, insiders say, and alienated some who believed he had lowered the Vatican's international profile.

One of the letters leaked by Benedict's butler in 2012 revealed a clash between Bertone and Archbishop Carlo Maria Vigano. Vigano went over Bertone's head and wrote a letter to Benedict complaining of corruption in the Vatican. Bertone later transferred a reluctant Vigano to Washington.

Bertone brought in Italian banker Ettore Gotti Tedeschi in 2009 to become president of the Vatican Bank with a mandate to make the bank's finances more transparent. But then Bertone resisted attempts to put the bank under more independent oversight, according to several Vatican officials. Gotti Tedeschi was ousted in 2012.

"In the end, things were starting to get very dangerous, because all of the financial activities were concentrated in [Bertone's] hands or in the hands of men loyal to him," said Massimo Franco, columnist and author of the new book "The Vatican According to Francis".

Bertone, 79, has denied accusations of being power hungry and a bad manager, telling reporters last year that he had been the victim of "vipers" in the Vatican. He could not be reached for comment because he was out of Rome on a spiritual retreat. Sodano, 86, was also unavailable for comment.

CLIQUES AND SOCIAL CLIMBERS

"Francis is trying to make deep reforms in the Curia ... but this will take some time," said Spanish Cardinal Julian Herranz, one of the three prelates who wrote a secret report for Benedict on the "Vatileaks" scandal.

Since Francis's election, the pope has publicly warned his cardinals to shun intrigue and cliques. Last May, he said in a speech that there was no room for "social climbers or careerists" in the Church hierarchy. He has urged cardinals not to behave as if they lived in "a royal court".

"He said: 'Don't take this (being a cardinal) as an honour, don't take this as a promotion, don't take this as a privilege,'" said Cardinal Vincent Nichols, the Archbishop of Westminster in London.

Francis fired his first salvo across the bow of the Vatican bureaucracy just one month into his papacy when he named an advisory board of eight cardinals from around the world to help him govern the Church and reform the Curia.

The board has an open-ended mandate and reports directly to the pope. Six months later Francis appointed Parolin.

A 59-year-old who has worked in the Vatican's diplomatic service since 1986, the new secretary had served as deputy foreign minister under Pope John Paul. His last post was nuncio, or ambassador, in Venezuela, where he guided the Vatican's delicate relations with the late President Hugo Chavez.

In an interview with an Italian newspaper after his appointment, Parolin said it was unfair to depict the Curia as "a place where conspiracies and power plays prevail".

But he said Vatican bureaucrats should "work hard to become more humane, more welcoming, more evangelical, which is what Pope Francis wants".

Those who know Parolin say he will have no difficultly sharing power with others at the top in the Curia and helping reshape the secretary of state's role into that of a first among equals rather than an all-powerful "vice pope".

"I think that one of the most important things about Parolin is that he doesn't have any interest in power for its own sake," said Nigel Baker, the British ambassador to the Vatican. (Additional reporting by Alessandra Galloni; Editing by Alessandra Galloni and Peter Graff)