On April 8, 2019, President Trump announced the designation of Iran's Islamic Revolutionary Guards Corps (IRGC) as a Foreign Terrorist Organization (FTO), including its Qods Force (see Appendix).
This report will discuss the impact of the designation, economically and militarily, both within Iran and on the regional and international level.
The IRGC As An Economic Organization
The IRGC, part of Iran's military, is a huge economic entity; its economic arms are an integral part of Iran's strategic infrastructure in construction, energy, communications, and agriculture. Designating the IRGC as an FTO will be a tremendous blow to its economic might within Iran and to its ability to operate outside Iran.
The Economic Aspect Of Designating The IRGC As An FTO
Thus, designating the IRGC an FTO constitutes a continuation of the Trump administration's policy that focuses on economic sanctions against Iran. If the U.S. sanctions to date have mainly concerned the oil sector – the main sector of Iran's economy – and banking, the sanctions will now harm the Iranian regime's most vital economic entity.
This move appears to be aimed at thwarting Iran's partial consent to the guidelines of the Financial Action Task Force (FATF) aimed at fighting money laundering and terrorism – guidelines which Iran has so far rejected for fear that by consenting to them it will expose the IRGC and its organizations to direct harm. Under European pressure, Iran has so far obtained a series of postponements for the imposition of FATF guidelines on it, and there is now a fear that Iran will obtain special status, in the framework of which it will be required to comply with only some of the FATF laws and regulations. The Trump administration's move at this time to designate the IRGC an FTO appears to preempt the possibility that Iran will accept such a special arrangement, which would allow the IRGC to continue its activity in the country and across the region.
The Regional Aspect Of Designating The IRGC As An FTO
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An additional aspect of the Trump administration's designation of the IRGC as an FTO is that this would block Iran's activity within Iraq and Syria, which is being carried out by the IRGC. Iran is working to exploit Iraq's banking infrastructure, construction projects, bilateral trade, and energy, primarily in the oil sector, as an important platform for circumventing the U.S. sanctions on Iran; see the following MEMRI reports:
- In Advance Of Iranian President Rohani's Iraq Visit, Iran Takes Control Of Iraqi Banking System – In Cooperation with Iraqi Prime Minister – In Order To Circumvent U.S. Sanctions, March 7, 2019
- Iraq's Importance To The Survival Of Iran's Regime And Economy Following U.S. Sanctions, January 30, 2019
- Former Senior Hashd Al-Sha'bi Official To Saudi Alarabiya.net: Iraqi Central Bank Governor Is Collaborating With Iran In Counterfeiting, Money-Laundering – As Part Of Iran's Efforts To Circumvent U.S. Sanctions, March 28, 2019.
Designating the IRGC enables the Trump administration to level sanctions against Iraq for violating the U.S sanctions on Iran.
The International Aspect Of Designating The IRGC As An FTO
With the designation, the U.S. is again aligning with its traditional allies – the moderate Sunni Arab world and Israel – against Iran, its Islamic Revolution, and the resistance axis it has established across the Middle East.
The Military Aspect Of Designating The IRGC As An FTO
Iran may choose to operate Shi'ite militias – perhaps in Iraq – against American interests there. As IRGC Commander Mohammad Ali Jafari warned on April 7, 2019, designating the IRGC "will harm Iran's national security" and will bring in its wake "disquiet for American forces in the region." See the following MEMRI reports:
- Iran-Backed Shi'ite Militias In Iraq: We Will Drive Out The Americans By Force, January 8, 2019
- Legislative Efforts To Expel U.S. Troops From Iraq, Alongside Shi'ite Militias' Threats To Force Them Out, March 6, 2019.
Appendix: Statement from the President on the Designation of the Islamic Revolutionary Guard Corps as a Foreign Terrorist Organization – April 8, 2019
Today, I am formally announcing my Administration’s plan to designate Iran’s Islamic Revolutionary Guard Corps (IRGC), including its Qods Force, as a Foreign Terrorist Organization (FTO) under Section 219 of the Immigration and Nationality Act. 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. The IRGC is the Iranian government’s primary means of directing and implementing its global terrorist campaign.
This designation will be the first time that the United States has ever named a part of another government as an FTO. It underscores the fact that Iran’s actions are fundamentally different from those of other governments. This action will significantly expand the scope and scale of our maximum pressure on the Iranian regime. It makes crystal clear the risks of conducting business with, or providing support to, the IRGC. If you are doing business with the IRGC, you will be bankrolling terrorism.
This action sends a clear message to Tehran that its support for terrorism has serious consequences. We will continue to increase financial pressure and raise the costs on the Iranian regime for its support of terrorist activity until it abandons its malign and outlaw behavior.
*A. Savyon is Director of the MEMRI Iran Media Project.
 Whitehouse.gov, April 8, 2019
 The intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering; in 2001 its mandate expanded to include terrorism financing.
 ISNA (Iran), April 7, 2019.
 Whitehouse.gov, April 8, 2019.