STRATEGIC ASSESSMENT. In Vienna, Austria, the United States and three European partners (France, the United Kingdom, and Germany), joined by Russia and China, have been negotiating with Iran over the past year to restore full U.S. and Iranian compliance with the 2015 multilateral Iran nuclear agreement. That accord exchanged strict limits on Iran’s civilian nuclear program for the easing of comprehensive U.S. sanctions that had thrown Iran’s economy into severe recession, in large part by reducing Iran’s exportation of crude oil. The Trump administration exited the agreement in 2018, re-imposed all U.S. sanctions, and adopted a policy of “maximum pressure,” intended not only to cripple Iran’s nuclear and weapons programs but to also roll back Iran’s influence throughout the Near East region.
In implementation of the maximum pressure policy, the United States imposed a series of additional sanctions, beyond those in force prior to the nuclear deal. Among the added measures was the April 2019 naming of the IRGC as a Foreign Terrorist Organization (FTO)—a designation made under a 1996 law that was intended to apply to terrorist groups. Many terrorist groups are influenced and supported by governments, but the designation of the IRGC was controversial, because it represented the first time a duly authorized armed force or component of a national government was designated as a terrorist organization. Some have argued that because the IRGC is an arm of the Iranian state, the FTO listing of the IRGC is redundant with the longstanding U.S. designation of Iran as a state sponsor of terrorism. Others have argued that the designation is appropriate, since the IRGC engages in and facilitates terrorism. Furthermore, the designation hinders the IRGC in important ways, including preventing members from traveling to the United States and allowing for terrorism victims to sue individuals or entities aiding and abetting the actions of a designated FTO. Iran’s leaders consider the labeling as an affront against an organization that is respected inside Iran. The IRGC remains a powerful constituency of Iran’s regime and a bastion of Iranian hardline sentiment that seeks to defend Iran by supporting powerful factions in the region that can influence their national governments to adopt policies favorable to Iran.
The U.S. decision to negotiate a re-entry into the 2015 multilateral Iran nuclear agreement has given Tehran an opportunity to address its grievance by demanding that the United States revoke the IRGC’s FTO label. U.S. and other nuclear negotiators in Vienna indicate that Tehran’s requirement on the IRGC designation is the last major remaining hurdle to achieving a deal. Not wanting to be accused by domestic critics of being “soft on Iran,” or “soft on terrorism,” U.S. negotiators reportedly have refused to bow on the issue thus far, arguing that sanctions on the IRGC were not required to be lifted under the 2015 nuclear deal. European negotiators (Germany, France, and the United Kingdom) have proposed a compromise under which the FTO designation would be lifted if Tehran publicly commits to “de-escalate” in the region, though few trust the Iranians to keep their word. Regional activity through proxies remains a cornerstone of Iran’s security policy and ability to project power in the Middle East. Neither the United States nor Iran has, to date, accepted that compromise proposal, and the Vienna talks have remained stalled partially as a result.
Yet, U.S. leaders want to conclude the Vienna negotiations in large part to enable Iran to significantly increase its exportation of oil, easing the world oil price spike caused by Russia’s invasion of Ukraine. By maintaining that the FTO listing has always been primarily symbolic, U.S. negotiators have sought to preempt the criticism that would result from a decision to accept Tehran’s position. U.S. officials point out to critics that the IRGC has long been subject to U.S. sanctions that are equivalent to those triggered by the FTO listing, and which would remain even if the FTO designation is revoked. In October 2007, the IRGC was sanctioned under an executive order targeting proliferation-supporting entities. Simultaneously, the IRGC’s Qods Force was sanctioned as a terrorist group under a 2001 executive order (a lower-profile designation than an FTO label), because of its role supporting regional armed factions such as Lebanese Hezbollah. In June 2011, the IRGC was designated as a human rights abuser under a separate executive order. In October 2017, the IRGC in its entirety was designated as a terrorist entity under the 2001 executive order. As does the 2019 FTO designation of the IRGC, all of the executive orders under which the IRGC has been sanctioned close off the U.S. market to any foreign company determined to have transacted business with the IRGC. The FTO designation carries one significant additional penalty—the leveling of criminal charges on any U.S. citizen that provides the IRGC with “material support,” such as a financial donation, information, access to facilities, etc.
The U.S.-Iran dispute over the IRGC’s FTO designation illustrates the depths of emotion and history that have, to date, prevented any significant improvement in U.S.-Iran relations. The IRGC listing might ultimately be resolved, paving the way for finalizing a mutual return to the nuclear agreement. But, judging from the difficulty in reviving even a limited and previously negotiated pact, and the many additional files that remain in dispute, it is difficult to envision when, and under what circumstances, U.S. relations with Iran might be normalized.
