The US Escalates Even Further Against Iran—To What End?

The Trump administration added another layer to its “maximum pressure” campaign against Iran when it declared the country’s Islamic Revolutionary Guard Corps a “Foreign Terrorist Organization”—an escalation that exposes to U.S. criminal prosecution anyone supporting the most powerful security services of the Iranian government.

“This unprecedented step, led by the Department of State, recognizes the reality that Iran is not only a State Sponsor of Terrorism, but that the IRGC actively participates in, finances, and promotes terrorism as a tool of statecraft,” President Donald Trump said, announcing the decision in a statement Monday morning. “This designation will be the first time that the United States has ever named a part of another government as a FTO.”

The designation goes into effect a week from now. Depending on whom you ask, the step is long-overdue recognition of reality, or a superfluous gesture, or even a provocation that puts U.S. troops at risk.

The Islamic Republic is already subject to a wide array of sanctions, including Treasury Department terrorism-related sanctions against the IRGC; its oil exports have plummeted since the Trump administration withdrew from the Iran nuclear deal last year; its economy, which was mismanaged and unhealthy even before then, has suffered further. The U.S. has considered Iran a state sponsor of terrorism since 1984, a designation that also involves sanctions.

The IRGC, however, is the body driving many destabilizing regional activities that the Trump administration has declared must cease, through its support for regional proxies such as Hezbollah and its involvement in terrorist schemes further afield—including what the U.S. called an attempted plot to assassinate the Saudi ambassador in Washington in 2011. The United States holds the IRGC responsible for the deaths of nearly 260 Americans, and dozens of their local and international allies, in separate bombings at the Marine barracks in Beirut in 1983 and the U.S. Embassy annex there in 1984. The hope is that the designation will make it even harder for other countries to do business with the Islamic Republic, tightening the noose still further after repeated rounds of sanctions.

From its roots in the Iranian revolution of 1979, which it was founded to protect and propagate, the IRGC has grown in clout and influence—not just over Iran’s regional policies through its Quds Force, or in its suppression of domestic dissent through its Basij militias, but also as a powerful economic actor. Rand Corporation researchers a decade ago assessed that its influence extended “into virtually every corner of Iranian political life in society,” with interests in industries from auto manufacturing to laser eye surgery, plus smuggling and other black-market activities. One U.S.-based IRGC founder turned dissident once dubbed the organization “something like the Communist Party, the KGB, a business complex, and the Mafia.”

The true extent of its grip on the Iranian economy is murky, however, as then–CIA Director Mike Pompeo admitted in 2017. “It is a difficult, complex intelligence undertaking to sort out which entities are controlled by the Quds Force,” the IRGC’s external arm, he said. (The Quds Force is itself subject to terrorism-related Treasury sanctions dating from 2007.) “It is intentionally opaque, but as much as 20 percent of the Iranian economy is controlled by them.”

The new terrorism designation means anyone doing business in Iran risks criminal prosecution in the United States on charges of material support to a terrorist organization. Even, theoretically, a European businessman just looking to invest in a laser-eye-surgery outfit. Or possibly, depending on what kinds of exceptions the policy allows, a U.S. security contractor working against ISIS remnants alongside Iraq’s powerful Shia militias—some of which are backed by the IRGC. This differs from the existing sanctions against the IRGC, which fall under Treasury Department authorities and mainly involve financial penalties for being part of or supporting the group.

The intent is to further chill foreign investment prospects for a country starved of cash, where it was quite difficult to invest to begin with.

Existing sanctions made it so difficult, in fact, that some wonder why the administration has bothered with the designation at all. “We do not need to do this to maximize economic pressure on the IRGC, or Iran, for that matter,” Richard Nephew, who was the sanctions expert for the team that negotiated with Iran under President Barack Obama, wrote in an email. The Treasury sanctions, plus a 2010 law called the Comprehensive Iran Sanctions, Accountability, and Divestment Act, mean “only the incorrigibles” would do business with anyone they suspect of IRGC ties—major companies avoid them anyway. “In the Obama administration, this was enough to prove to us that this was not worth doing. Then, when we got into the possible negatives—including what this might mean should IRGC forces and U.S. forces be operating in the same space ... we concluded this might do more harm than good.”

Mark Dubowitz, who heads the hawkish Foundation for Defense of Democracies and has advised the Trump administration on Iran policy, advocated for the new designation, and argues that it makes a big difference. “This just layers on top of all of the current sanctions an additional and more expansive, punitive measure that will deter more business and, I believe, diminish current business that’s still ongoing between the Europeans and the Iranians, and the Asians and the Iranians,” he told me.

As for the question of what it means for U.S. troops, Iranian officials have vowed to reciprocate with a terrorism designation of their own against U.S. forces—implying they’d view them as targets just as they’d view, say, ISIS members. Maybe that’s bluster, but it introduces a volatile dynamic at a moment when, following the fall of the caliphate, U.S. forces and Iranian forces and proxies are competing for influence in Syria and Iraq, said Ariane Tabatabai, an associate political scientist at Rand. “Iran doesn’t have as much to lose as it had in the past,” she told me. Tabatabai noted that one IRGC-affiliated account on social media had suggested targeting U.S. contractors—one potential way of escalating without hitting American troops directly.

Indeed, this possible risk was what helped prevent an FTO designation in the past. When the Treasury Department made its own terrorism designation against the IRGC in the fall of 2017, then–Secretary of State Rex Tillerson explained that the position of U.S. troops was a reason not to go further. “There are particular risks and complexities to designating an entire army of a country,” he said at the time, adding that it “would put in place certain requirements where we run into one another in the battlefield, and it would trigger actions that are not necessarily in the best interests of our military actions.”

In the meantime, though, the administration has declared the Islamic State territorially defeated and is planning a withdrawal of most of its troops from Syria, where the IRGC has a strong presence. Tillerson has left the State Department, and Pompeo, who has advocated a much tougher line against Iran, has joined. The State Department last week publicized declassified Pentagon figures, calling Iran responsible for the deaths of more than 600 U.S. service members in Iraq. “This accounts for 17 percent of all deaths of U.S. personnel in Iraq from 2003 to 2011,” said Brian Hook, the State Department’s special representative for Iran, at a State Department briefing last week. “This death toll is in addition to the many thousands of Iraqis killed by the IRGC’s proxies.”

A spokesman for Senator Ted Cruz, the Texas Republican who has been pushing for the designation for five years, wrote in an email: “Iran is trying to blackmail the U.S. by threatening even more terrorist attacks if we call out their ongoing terrorist attacks, but [Senator] Cruz believes we can’t accept that blackmail.” Addressing a question about possible risks to U.S. troops at a Monday press conference, Hook responded: “The IRGC has been threatening American troops almost since its inception … What endangers American troops in the Middle East is an IRGC that operates with impunity.”

Depending on what exceptions apply to the new designation, it also potentially exposes U.S. troops to a different kind of risk: the possible need to coordinate with a group their government considers a terrorist organization. “In the battle of Tikrit against the Islamic State, the US Air Force provided air support to Major General Qassem Suleimani, the Quds Force, and the Iraqi Shia militias under Suleimani’s direct or indirect command,” Ali Alfoneh, a senior fellow at the Arab Gulf States Institute in Washington and an expert on the IRGC, wrote in an email. “In doing so, the US Air Force provided material support to a terrorist organization, a deed prohibited by the U.S. Treasury.”

Just as the U.S. was in de facto alignment with the IRGC against ISIS, Alfoneh pointed out, there will be another terrorist group that threatens both parties’ interests. “Sooner or later,” Alfoneh wrote, “the U.S. government will cooperate with the IRGC, a U.S. designated terrorist organization, to fight a real terrorist organization. How does the administration explain that to the public?”

Whatever the regional consequences of the designation, there’s a whole other set of domestic political consequences ahead of the 2020 campaign for the presidency. The Democratic National Committee has called for returning to the Iran deal Obama negotiated and Trump left; the more sanctions are layered on to the Iranian regime, the more complicated it becomes to unravel them in the event a Democrat wins the presidency and seeks to reenter the deal.

Iran, administration officials have said, already faces “unprecedented” financial pressure—but more may be coming. The Cruz spokesperson wrote that the senator intended to push to codify the designation alongside “layers of sanctions for the full range of the IRGC’s malign activities”; Dubowitz advocated in The Wall Street Journal building “a wall of sanctions”—to encircle Iran, but also, by implication, to constrain any Trump successor’s freedom of maneuver. “Politically, it would be hard to make the case for dismantling these sanctions, since all evidence points to Tehran’s wrongdoing,” he wrote. “If blocked from delivering sanctions relief to Iran, the next administration would have little choice but to wield U.S. economic leverage and negotiate a follow-on agreement that addresses the fundamental flaws of the JCPOA”—the Joint Comprehensive Plan of Action, as the Iran deal is formally known.

Administration officials have said the campaign of mounting pressure is designed to force Iran back to the negotiating table, to conclude a deal that not only permanently blocks it from getting a nuclear weapon, but fundamentally changes the regime’s behavior in its region. Writing in The New York TimesMonday, ahead of Trump’s announcement, Hook held out the prospect of better relations: “Isn’t it time to abandon the policies that have kept the people of Iran and the United States apart since 1979?” Tehran’s leaders have publicly refused to negotiate so far. But the wager is that if the prospect of better relations isn’t carrot enough, there’s always more stick.