A New Nuclear Deal with Iran Shouldn’t Be Accompanied by Terrorist Legitimization

Iran has a new demand for U.S. diplomats as they conclude what will hopefully be the final round of negotiations for a new nuclear agreement later this month: Remove the 2019 U.S. foreign terrorist organization (FTO) designation on Iran’s Islamic Revolutionary Guard (IRGC). The United States should reject this demand, even if it risks Iranian noncompliance with negotiations. Removing the terrorist stigma from the IRGC will embolden Iranian proxies and anger regional allies.

FTO designations can be assigned to groups if they meet three criteria under U.S. Code §1189—the group must be foreign, engaged in terrorist activity, and threaten U.S. national security. By labeling a group as an FTO, the United States creates extraterritorial criminal and civil liability for parties engaged in providing them with material support. There are currently 73 groups listed, and their status is reviewed every five years by the U.S. State Department.

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Maintaining the FTO designation applies political pressure on states that interact with the IRGC—namely Iraq, Syria, and Lebanon—to significantly alter their relationships or risk international pariah status. The Iranian marketplace becomes dangerous for prospective business partners, as any dealings with the country could be perceived as IRGC financing since it is state-sponsored. Designations also clarify U.S. attitudes toward international actors and let Iran know that the actions of its paramilitary organization are not tolerated by the United States, irrespective of any future diplomatic re-engagement.

FTO de-designations are less common, with the United States removing only 15 groups from the list since its inception. In most de-designation cases, the groups have been removed due to their outright disbandment, which would not be the case with a de-designation of the IRGC. Attempts to remove groups still active from the list, such as the Houthis, have had negative consequences for U.S. national security.

In February 2021, the United States removed the FTO label from the Houthis, a Yemeni Shi’ite militia group that receives direct funding from the IRGC. The purpose of this de-designation was to better provide Yemeni civilians with humanitarian aid. The designation made it difficult for human rights groups and charitable individuals to donate food, medical supplies, and money while a Saudi-led blockade effectively starved the country. However, the Houthis did not provide any concessions, and less than a year later, the group took advantage of this gesture by launching drone strikes on the United Arab Emirates.

The backlash to this attack was swift. Within the month, the Saudis and Emiratis worked together to conduct lethal airstrikes on the Yemeni capital of Sanaa. The Houthis, using Iranian-supplied weapons, responded with strikes on Saudi airports and other civilian locations. The U.S. Treasury Department subsequently crafted new sanctions on the Houthis’ financial network, implicating the IRGC by name. De-designating the IRGC to return to a nuclear deal would send mixed messages from the Biden administration to the Arab world and encourage Iran to spend its newly sanctions-free assets on more excellent militia investment to counter Sunni influence.

Not only will the UAE and the Saudis feel abandoned by the United States if it takes this course of action, but Israel will also question the sincerity of the United States in its stated goal to preserve Israeli sovereignty, which Iran doesn’t recognize. Iranian Supreme Leader Ali Khamenei demands that “all Muslims must fight until the annihilation of Israel,” and easing Tehran’s ability to supply its most extreme fighting force with outside money will get the regime closer to that goal.

Instead of dropping the IRGC’s FTO designation without concessions, the United States should consider publicizing the non-statutory factors involved in assigning such a designation. This action would inform the international community about the objective criteria involved in U.S. counterterrorism strategies and prevent Washington from appearing disorganized on designation issues between presidential administrations.

Iran’s recent budget and presidential cabinet appointments should inform the Biden administration that a nuclear agreement will not change Iran’s priorities to support the IRGC at the expense of the civilian population. Iran is spending more on the Guards than ever before. Removing the red tape around the IRGC as it expands its research and weapons production capacities would betray close relationships that have taken decades to build. No nuclear agreement should impact the FTO de-designation process, and past conduct by the Houthis justifies the hesitancy to cave to Iranian demands. Removing the label of terrorism should take effort on behalf of the offending party, something the Islamic Republic is unwilling to provide.

John O'Malley

John O'Malley is currently the Middle East Security intern for the Center for a New American Security (CNAS)

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