According to the New York Times and Reuters, the Trump administration is prepared to designate the Islamic Revolutionary Guard Corps (IRGC) a Foreign Terrorist Organization (FTO) as soon as next week. This is an extremely provocative move by an administration that increasingly looks eager to start a war with Iran. At minimum, it will put the Joint Comprehensive Plan of Action (JCPOA) – the Iran nuclear deal – in extreme jeopardy.

A Reckless Escalation that Increases Risk of War and Takes Diplomacy Off the Table

• The Trump administration has engaged in a rhetorical escalation, an expansion of sanctions designations and a ban on travellers from Iran. Iran has responded by conducting tests of surface to air missiles and banning visas for Americans.
• An FTO designation puts significant constraints on any further diplomatic engagement with Iran, leaving only threats and military action. Had this designation previously been in place, it would have likely blocked the nuclear negotiations as well as efforts to release Americans detained in Iran.
• The Trump administration already lacks backchannel communications with the Iranians, increasing the risk that escalation spirals out of control. While the Obama administration at times escalated, it also built relationships with Iranian counterparts so it could pursue de-escalatory measures as needed.
• Hardliners will be boosted by provocative U.S. actions leading into the May 2017 Iranian presidential elections. Already, Iranian Supreme Leader Ali Khamenei has exploited the Trump administration’s actions to generate popular backlash. The Rouhani government, which has advocated for engaging the West and has fought to reign in the IRGC, may either lose reelection or be forced to adopt a more hardline stance under domestic pressure due to the Trump Administration’s actions.

Jeopardizes the JCPOA

• The designation is reportedly intended “to dissuade foreign investment” in Iran, which would put the U.S. in contravention of the JCPOA. Paragraph 29 of the JCPOA’s Main Text obligates the U.S. and other parties to “refrain from any policy specifically intended to directly and adversely affect the normalization of trade and economic relations with Iran.”
• The designation would subject non-U.S. persons that conduct a transaction involving a non-designated Iranian entity in which the IRGC holds an interest — passive or otherwise — to civil and criminal penalties (18 U.S.C. § 2339B). That threatens to kill the practical value to Iran of the JCPOA’s sanctions-lifting, as the risk of engaging with broad sectors of Iran’s economy could prove too substantial to merit potential benefit.
• Advocates of this approach, such as the Foundation for Defense of Democracies, have made clear that the ultimate aim of such a move is to kill the JCPOA.

The U.S. Military Has Opposed Designating IRGC

• In 2007, the U.S. military reportedly opposed designating the IRGC or the Qods Force as a Specially Designated Global Terrorist (SDGT).  According to The Twilight War  by David Crist, it was the position of the Joint Chiefs that foreign militaries or their officers should not be designated as “terrorists” for fear that such designation could be reciprocated against the U.S. military, particularly its Special Forces officers.

FTO designation puts American lives at risk

• Currently, the U.S. and Iran are engaged in de facto tactical cooperation in Iraq as both U.S. forces and Iran-linked Shia militias target ISIS forces, including in Mosul. Designating the IRGC an FTO will put that tactical cooperation at risk.
• The designation could turn the current de-facto cooperation into outright conflict with Iranian forces and proxies in Iran. U.S. personnel remain on the ground in Iraq and an FTO designation could pose significant threats to U.S. soldiers on the front lines against ISIS forces.
• If an FTO designation results in a deterioration of this de-facto cooperation it could result in U.S. personnel deaths even if Iranian-backed militias do not directly confront U.S. forces. The mere lack of coordination in the battlespace is inherently dangerous.
• Ultimately, Iran hawks may seize on any such designation to press for the U.S. to take offensive actions against Iran or Iranian-backed militias within the Iraqi battlespace.

The IRGC Is Already Heavily Sanctioned But Will Exploit An FTO Designation For Own Benefit

• The IRGC was not designated under a single U.S. sanctions programs until October 2007 and has thrived since then in a sanctions economy.  
• Iran’s private sector, not the IRGC, will be the victims of a designation. The chilling effect that an FTO designation would have on the entire Iranian economy will harm the private sector, which – thanks to the JCPOA – had been clawing back its share of the economy relative to the IRGC.