The designation of Iran's Islamic Revolutionary Guard Corps (IRGC) as a Foreign Terrorist Organization (FTO) imposes few if any new restrictions. As President Trump noted, though, it is technically an "unprecedented" action, since the label was intended for non-state actors.
The big picture: This amounts to just one more layer of opprobrium on top of Iran’s 1984 designation as a state sponsor of terrorism, the IRGC’s designation under separate counterterrorism authorities, and a long list of related sanctions. Because most countries and firms worried about U.S. sanctions have already left the Iranian market, it's unlikely to chill much international business.
Where it stands: Iran has already announced that it will designate the U.S. military as a terrorist organization — a similarly symbolic gesture. It may end there.
Yes, but: The real concern is that this designation will escalate the conflict between Washington and Tehran, in three possible ways.
- Iran has so far failed to take the bait as U.S. sanctions have expanded. They probably hope to stay that course, but the IRGC designation could trigger a policy change or at least provide a pretext for factions in Tehran looking for confrontation.
- Lower-level commanders and officials might take this rhetoric as instruction or permission for more aggressive action on the ground, leading to unintended escalations in Iraq, Syria, the Gulf or other places where both countries have military forces.
- Ambassador John Bolton and other hardliners are clearly frustrated by Iran’s tempered reaction to the U.S. withdrawal from the nuclear accord. By remaining compliant with the deal, Iran has spared U.S. allies in Europe and elsewhere from having to to choose sides. But further provocations from the Trump administration would be harder for Tehran to ignore and could prompt a crisis.
Between the lines: U.S. partners forced by proximity to rub elbows with the IRGC — including the governments of Iraq, Afghanistan and Lebanon — might worry that unavoidable contacts could make them subject to U.S. sanctions, but enforcing any would require Washington to take further and ultimately self-defeating positions.
What to watch: It's possible the FTO designation is a sop to hardliners who failed to persuade the president to adopt a more aggressive posture. Or, as can't be ruled out in an administration that has not prioritized interagency policy review and decision-making, it could prove disconnected from other Iran policy decisions.