Washington’s Dangerous New Consensus on China
Don’t Start Another Cold War
In February, the Donald Trump administration was considering designating Iran’s Islamic Revolutionary Guard Corps (IRGC) a Foreign Terrorist Organization—only to shelve its plans after encountering opposition in Washington. Noting the White House’s recent difficulties, Mark Dubowitz and Ray Takeyh urge the Trump administration to sanction the IRGC under Executive Order 13224, which created the Specially Designated Global Terrorist Sanctions Program (“Labeling Iran’s Revolutionary Guard,” March 6). Doing so, however, would invite the same problems associated with designating the IRGC an FTO—such as endangering U.S. forces in Iraq and undermining the nuclear accord between Iran and six world powers—and would have little effect on the IRGC’s operations.
Dubowitz and Takeyh argue that designating the IRGC a terrorist group would weaken the IRGC’s “financial empire”—a prerequisite, they write, for “stabiliz[ing] the Middle East.” But the IRGC is already one of the most sanctioned entities in the world—a fact that the 2015 nuclear deal did little to change. What is more, the U.S. Department of the Treasury’s Office of Foreign Assets Control, or OFAC, has designated the IRGC for its involvement in Iran’s ballistic missile program, its human rights abuses around Iran’s June 2009 presidential election, and its disruption and monitoring of Iranian citizens’ communications, imposing the same sanctions as would follow from a terrorist designation under Executive Order 13224. Designating the IRGC a terrorist group under the executive order would thus duplicate current U.S. sanctions.
The Office of Foreign Assets Control also administers and enforces tough secondary sanctions on the IRGC, punishing foreign banks and firms implicated in transactions involving the guards or its designated affiliates with exclusion from the U.S. market. Those restrictions go beyond those that a terrorist designation would produce: whereas a terrorist designation would freeze the assets of the IRGC and any of its designated affiliates that came within the United States or into the control of an American entity, the existing secondary sanctions limit the activities of non-U.S. individuals and entities who might consider dealing with the IRGC, creating an effective worldwide boycott of the group. Few foreign companies have bet against the United States’ enforcement of those sanctions. Firms interested in doing business with Iran have shown caution in their approach.
Dubowitz and Takeyh argue that Trump should “significantly [expand] the number of IRGC entities and individuals subject to sanctions from the current 60 to include the thousands of front companies operated by the guards.” They do not mention that, under OFAC’s so-called 50 percent rule, any entity of which a designated person or group (such as the IRGC) has majority ownership is already subject to U.S. sanctions. It is true that OFAC does not impose sanctions on entities in which the IRGC has less than a majority stake—but OFAC has also stated that such entities “may be the subject of future designation or enforcement action by OFAC.” This warning has deterred foreign firms from dealing with the kinds of front companies to which Dubowitz and Takeyh refer.
If the benefits of designating the IRGC a terrorist group are hazy, the costs are obvious. Doing so would undermine the nuclear deal by dramatically escalating tensions with Iran. It would also derail the tacit cooperation between Washington and Tehran in the fight against the Islamic State, or ISIS, in Iraq, since the IRGC and the Shiite militias it backs would likely respond by trying to frustrate the United States' efforts in the country. As U.S. military officials have argued, that could endanger the lives of U.S. troops. More broadly, it is not clear that additional sanctions could force Iran to meaningfully change its behavior without sacrificing other U.S. interests and putting the two countries on a path to conflict.