Iran has reentered the international economy, but it has not exited the international terror industry — and the United States must act accordingly. President Obama has repeatedly pledged that he would continue to combat Iran’s regional aggression in the post-nuclear deal era, but he thus far has refused to impose new penalties on the organization that drives it: the Islamic Revolutionary Guard Corps (IRGC), the regime’s praetorian guard.
To weaken the organization, the administration should designate the IRGC as a Foreign Terrorist Organization (FTO), thereby mitigating the impact of sanctions relief on Tehran’s ability to finance its global terror operations.
The Heart of the Revolution
The mission of the IRGC, which emerged in 1979 as part of Iran’s Islamic Revolution, remains integral to the regime’s raison d’être. Charged with protecting and disseminating the ideals of the Islamic Revolution both at home and abroad, the IRGC manages Iran’s nuclear and ballistic missile programs, bears responsibility for many of the regime’s pervasive human rights abuses, and spearheads Tehran’s drive for regional hegemony through its elite Quds Force. It also maintains its own army, navy, and air force apart from Iran’s conventional military.
As Iran’s “most powerful economic actor,” according to the U.S. Treasury Department, the IRGC also controls as much as 20-30 percent of the country’s economy, giving the organization enormous political and domestic influence. Its economic largesse, Treasury has noted, directly funds “the full range of the IRGC’s illicit activities, including WMD proliferation and support for terrorism.”
Today, the IRGC controls the regime’s efforts to back Syria’s Assad regime and the Lebanese terrorist group Hezbollah. It sponsors Shiite militias in Iraq, which have killed more than 500 U.S. soldiers since 2005 and recently kidnapped three American contractors in Baghdad. It has trained and equipped Houthi rebels in Yemen. It presided over Iran’s recent illicit ballistic missile tests. In recent months, it has implemented the regime’s largest human rights crackdown since the Green Revolution of 2009. And the IRGC Navy executed the recent capture of 10 U.S. sailors in the Persian Gulf as well as other acts of naval aggression over the past decade.
The Fig Leaf of Current IRGC Sanctions
Under the July 2015 nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), the United States will maintain existing sanctions on the IRGC, but it nonetheless will reap extensive benefits as a result of sanctions relief on the wide array of enterprises it directly or indirectly controls.
Emanuele Ottolenghi of the Foundation for Defense of Democracies (FDD) has exhaustively documented how the January 16 implementation of the JCPOA lifts or suspends U.S., European Union, and United Nations sanctions on IRGC-dominated sectors of the Iranian economy, including transportation, telecommunications, construction, and oil and gas, among others. Similarly, the JCPOA delists companies that have facilitated the IRGC’s nuclear and ballistic missiles programs and its support of the Assad regime, while the release of some $100 billion in frozen assets enables Tehran to further invest in IRGC-backed entities. Last week, Secretary of State John Kerry acknowledged that some of the sanctions relief “will end up in the hands of the IRGC or other entities, some of which are labeled terrorists.”
Under these circumstances, President Obama cannot plausibly claim, as he stated just a week after finalizing the JCPOA, that the United States will not let Iran “off the hook” for terrorism after its implementation. Rather, the existing terrorism sanctions that the White House has pledged to retain now serve as a fig leaf for the JCPOA’s broader economic concessions that will dramatically strengthen the IRGC.
Nevertheless, the United States can diminish the IRGC’s economic windfall without violating U.S. commitments under the JCPOA. By designating the IRGC as an FTO, the United States can send a strong message to the global business community that it remains committed to punishing those who conduct business with terrorists. Such a step would help deter foreign investment by creating an increased reputational risk, since firms eager to invest in Iran may hesitate to pursue entanglements with Iranian partners connected to the IRGC. An FTO designation would also encourage U.S. allies to take measures of their own to curtail investment in IRGC-affiliated entities.
House and Senate lawmakers have introduced legislation that would advance these goals. The IRGC Terrorist Designation Act (S. 2094 and H.R. 3646) calls upon the secretary of state to designate the IRGC as an FTO; if he refuses, he must submit a statement offering a reason. The IRGC Terrorist Sanctions Act (H.R. 3693) directs the Treasury Department to submit a report that explains whether the IRGC meets the legal requirements for an FTO designation.
In this context, as FDD’s Ottolenghi notes, the United States can impose further costs on the IRGC by increasing the number of of IRGC officials and IRGC-backed entities on Treasury’s Specially Designated Nationals (SDN) list, which delineates individuals and companies that are prohibited from conducting business with the United States. Despite the tough sanctions that the United States and Europe imposed on Iran between 2010 and 2012, many IRGC front companies and officials escaped designation. The Obama administration must now correct this oversight. “The message” to potential investors, writes Ottolenghi, “would be: IRGC companies are more numerous than you may think. A company with IRGC connections that is not yet on the SDN list today might be there tomorrow.”
The Obama Administration’s Position
The Obama administration has yet to publicly express a formal position on an IRGC designation, but statements by current and former senior officials thus far suggest likely opposition.
First, according to Under Secretary for Terrorism and Financial Intelligence Adam J. Szubin, existing sanctions already apply to the IRGC and its subsidiaries, making a new FTO designation superfluous. Second, Assistant Secretary of State for Near Eastern Affairs Anne Patterson has suggested that the IRGC may not meet the legal definition of an FTO. Third, Daniel Benjamin, the State Department’s coordinator for counterterrorism from 2009 to 2012, has argued that an FTO designation would contradict America’s history of limiting designations to nongovernmental organs.
These arguments do not withstand scrutiny. Current U.S. sanctions on the IRGC remain insignificant relative to the billions of dollars in relief the IRGC will receive as a result of the lifting of sanctions on the numerous entities its controls. An FTO designation would instead have a powerful deterrent effect that could diminish foreign investment in the sectors of Iran’s economy that actually provide the bulk of the IRGC’s funding.
Likewise, as the Government Accountability Office has noted, Section 219 of the Immigration and Nationality Act delineates three criteria for FTO designations: (1) It must be a foreign organization; (2) the organization must engage in terrorist activity or retain the capability and intent to do so; and (3) the organization’s terrorist activity must threaten the security of U.S. nationals or the national security of the United States. The IRGC easily meets these criteria.
An IRGC designation would also have ample precedent: In 2007, President George W. Bush designated the IRGC as a “specially designated global terrorist” pursuant to Executive Order 13224, enabling the United States to block the organization’s assets and restrict its business activities. Moreover, the alleged absence of precedent hardly justifies a refusal to take meaningful new steps that would advance the underlying intent of such designations: combating terrorism. A rigid commitment to an immaterial distinction between state-controlled and private entities would represent the triumph of bureaucratic legalese over sound policy.
A simpler explanation may account for the Obama administration’s hesitation: It fears that new sanctions would prompt Iran to withdraw from the deal. In fact, in his House testimony, Daniel Benjamin explicitly advanced this argument as an additional reason to oppose an FTO designation. “From a signaling standpoint,” he said, “I’m not sure that it is exactly what we need at precisely the moment that we want to see more — we want to see an effective implementation of the JCPOA.” In reality, the opposite is the case. By failing to penalize Iran for its aggression, the White House sends Tehran the message that it stands to face few or no consequences for violations of the agreement, thus encouraging future intransigence.
A designation of the IRGC as an FTO should elicit the support of proponents and opponents of the nuclear agreement alike: It not only would give teeth to President Obama’s pledge to combat Iran’s regional aggression, but would also help discourage Tehran from engaging in further provocations. If the White House insists that current sanctions remain sufficient to rein in the IRGC, it should not be surprised if Iran concludes that the Obama administration is no longer committed to defeating IRGC terrorism.
