The Key to Countering Iran

By Stratfor Worldview

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Political and economic pressure from the United States will unite Iran's fractious political system behind the Islamic Revolutionary Guard Corps (IRGC), which lies at the heart of Tehran's regional strategy. Washington's recent addition of the IRGC to the Treasury Department's list of terrorist groups probably won't have a substantial impact on the organization's ability to fund itself and allied militant groups across the Middle East. In response to the U.S. decision, Iran will boost its military and political support for the IRGC by expanding its budget for asymmetric operations, including the activities of the elite Quds Force and ballistic missile development.

Big Picture Update

As the U.S. campaign against Iran and its regional allies continues, measures to further sanction the Islamic Revolutionary Guard Corps could follow. But Iran's deep connections to many Middle Eastern governments create additional consequences for the United States if it follows through with that idea and sanctions an entity connected to the IRGC. Perhaps nowhere else is this truer than in Iraq.

Editor's Note: The United States is once again considering designating the Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organization. This would not be the first time that it has considered slapping such a label on the Iranian military branch. As Stratfor wrote in 2017, the functional effects on the IRGC of being designated as a foreign terrorist organization would be limited. But this time, the United States is also considering adding sanctions against some Iranian-trained militias operating in Iraq. Because many of the consequences and limits of targeting the IRGC are the same today as they were then, we are updating this analysis that originally published on Oct. 15, 2017, with the addition of three key areas that have evolved since then.

Update

When the United States considered labeling the Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organization in 2017, then Secretary of State Rex Tillerson and national security advisor H.R. McMaster were still with the Trump White House. In their places now are Iran hawks Mike Pompeo and John Bolton. The White House's national security team is, therefore, more heavily in favor of taking a more aggressive stance toward the Islamic republic. With the resignation of Defense Secretary James Mattis, no influential voices remain to back a moderate course of action. Neither the Pentagon nor the CIA support applying the terrorism label to the IRGC, but their sway is less than it once was. There is now a higher probability that the United States will follow through with the designation. If the State Department does indeed label the IRGC as a foreign terrorist organization, it would mark the first time in U.S. history that it would have singled out a branch of a foreign military for such treatment. 

On the question of targeting Iranian allies, the United States could designate several Iran-trained militias operating as part of Iraq's security architecture as terrorist groups under one of several laws. But the consequences of doing so could be high. Although those designations could fall short of provoking Iran to target U.S. personnel in the region, such a decision would stoke anti-U.S. sentiment in Iraq, where these groups have become more entrenched in recent years, and could inspire Iranian-backed popular mobilization units or other groups to lash out at U.S. military, diplomatic and economic targets in Iraq. It would also strengthen the push from Iran-allied politicians in the Iraqi parliament to amend or revoke Iraq's agreement with the United States to maintain troops in the country. Enforcing such a designation would create a complex problem of monitoring compliance for U.S. and other Western companies given that many of the Iranian-backed militias also have political wings. Earlier this month, the United States designated the Iranian-trained Harakat Hezbollah al-Nujaba militia in Iraq a terrorist group in what could mark the initial phase of this strategy.

Tehran would certainly respond to the designation of the IRGC as a foreign terrorist organization, but would likely opt for a pragmatic response, following the same path it has ever since the White House withdrew from the Iran nuclear deal in May 2018. Even though the United States is no longer a participant in the plan (known as the Joint Comprehensive Plan of Action, or JCPOA), Tehran has remained in the agreement while refraining from restarting prohibited nuclear activities. Neither has Iran, for instance, carried out a high number of ballistic missile tests or harassed U.S. military personnel in the region.

Driving Tehran's restraint has been the expectation that a harsh Iranian response would provoke robust retaliation from the United States that could include a limited military strike on a key Iranian target. Indeed, with more Iran policy hard-liners in the White House, the chances of such a response become more likely. As opposed to expressing violent displeasure, Iran has increased its global cyberwar activities and used additional asymmetrical means that do not draw a ready retaliation. With many of the 2020 presidential candidates from the U.S. Democratic Party staking out policy positions that favor rejoining the JCPOA, Tehran has decided to try to wait out U.S. President Donald Trump in hopes of having an easier time in dealing with a different president in 2021. But until the U.S. presidential election is decided, Iran is likely to continue its strategy of overt pragmatism.

Original Analysis

In a diplomatic dispute that seems to be growing more heated by the day, the United States has taken another swipe at Iran. On Oct. 13, U.S. President Donald Trump announced his decision to forgo the certification of Iran's nuclear deal with the West, just two days before the deadline, and to slap a new round of sanctions on a portion of the government in Tehran. As mandated by the Countering America's Adversaries Through Sanctions Act of 2017, Trump also labeled the Islamic Revolutionary Guard Corps (IRGC) — one of Iran's most powerful military branches — a terrorist group. He stopped short, however, of listing the corps as a foreign terrorist organization, an option the White House was rumored to have considered earlier this year.

Though largely symbolic, the new label will draw considerable ire in Iran. Blowback could come from any number of the IRGC's units — the aerospace, naval and overseas operations divisions, to name a few — that the designation targets. And much to the United States' dismay, the move will likely backfire by uniting Iran's divided political factions behind the group now in its crosshairs.

The Cornerstone of Iran's Strategy

The White House has set its sights on the IRGC because of how indispensable the group has become to Iran's modern strategy in the Middle East. Under the monarchy that ruled Iran in the 1970s, the country boasted one of the strongest militaries in the region, equipped with advanced hardware it had purchased from its erstwhile ally, the United States. After the Islamic Revolution of 1979, however, then-Supreme Leader Ayatollah Ruholla Khomeini deeply distrusted the country's regular army because of its close relationship with the shah he had helped to depose. Eager to form a force loyal only to him, Khomeini established the IRGC, and the once-formidable army began to languish amid a lack of funding. Today its conventional weapons and tactics are weak relative to those of its Turkish and Saudi counterparts.

Quds Force commander Gen. Qassem Suleimani attends a celebration marking the 37th anniversary of the Islamic Revolution on Feb. 11, 2016 in Tehran. (STR/AFP/Getty Images)

Instead, Iran has built its security strategy around the asymmetric capabilities of the dominant IRGC, in part to avoid the type of overt conflict that would expose the country's vulnerabilities in conventional warfare. A critical component of this approach is Iran's support for militant groups across the region, including Hamas, Hezbollah, the Palestinian Islamic Jihad and Kataib Hezbollah — all of which the U.S. State Department has declared to be foreign terrorist organizations. The IRGC (and, in particular, its Quds Force unit) is the primary caretaker of these relationships, providing support and funding to proxies in exchange for action against Tehran's rivals. Hamas and Hezbollah, for instance, are useful means of squeezing Israel from its southern and northern borders, respectively. In much the same way, Iran can lean on Yemen's Houthis and Bahrain's Al Ashtar Brigade to put pressure on Saudi Arabia. But perhaps most concerning to the United States is Iran's partnership with Iraq's Shiite militias, some of which Washington is currently working with. The United States fears that with nudging from Iran, these groups could start to target U.S. military personnel in Iraq.

Other core parts of Iran's asymmetric strategy are the ballistic missile and space programs that the IRGC's aerospace force leads. Though Iran probably won't be able to deliver a warhead to the United States in the near future, it can use ballistic missiles — much like its proxies — to strike at or deter attacks from nearby rivals with better-equipped conventional forces. The IRGC's navy is also designed to conduct rapid attacks, missile attacks and mining operations in the Persian Gulf, which could easily disrupt global shipping in the Strait of Hormuz and take a heavy economic, physical and psychological toll on Tehran's enemies.

Cyberspace has proved to be a theater in which Iran can thrive as well. The country is believed to have been behind the Shamoon cyberattacks that swept across the Arab Gulf states in 2012 before resurfacing in a modified form last year. Though the IRGC doesn't formally own Iran's cyberwarfare program, it controls many of the program's leadership functions. And in July, the IRGC arrested 23 officers for revealing evidence that the unit was responsible for several cyberattacks that hit Turkey in 2014-15.

Clearly, the IRGC has a hand in many of Iran's covert activities throughout the Middle East, and the United States is determined to curb them all. By default, then, any comprehensive U.S. policy for countering Iran must restrict the movements of the IRGC in some form or fashion.

Supporters of Lebanon's Shiite Hezbollah militant group wave flags bearing portraits of former Supreme Leader Ayatollah Ruholla Khomeini (L) in the southern Lebanese city of Nabatieh on Oct. 4, 2017. (MAHMOUD ZAYYAT/AFP/Getty Images)

What's in a Name?

But assigning the label of "terrorist organization" is no trivial matter. According to U.S. law, there are two ways in which Washington can designate groups as terrorist organizations, each with its own implications.

The first is using the Immigration and Nationality Act of 1965 to label a group a "foreign terrorist organization." It can be difficult to pursue since the term is narrowly defined as an entity that engages in terrorism or terrorist activities, or has the capability and intent to do so. The act is thus designed to target the culprits who are actually pursuing terrorist activities, rather than the individuals, companies or state actors providing them with material support. Because overseas proxy groups, rather than Iranian organizations such as the IRGC, carry out operations against Iran's rivals at its behest, the United States cannot easily dub the country's military branch a foreign terrorist organization.

The second option is to designate entities as "terrorist groups" (or individuals as "supporters of terrorism") under Executive Order 13224, as Trump declared on Oct. 13 that he intended to do. Signed by former U.S. President George W. Bush in the wake of 9/11, the order is meant to broaden the legal basis for the pursuit of terrorist support networks. Not only are the groups in the first category routinely considered to be terrorist organizations under this ruling as well, but so are their financial backers. Iran has held a spot on this list since 1984 as a state sponsor of terrorism, and the executive order will continue to be the United States' most logical legal mechanism for targeting Iranian citizens and groups.

From a practical standpoint, joining the ranks of Executive Order 13224's designees will do little to hamper the IRGC's activities. Because the United States has leveled punitive measures related to terrorism, human rights abuses and ballistic missile development against several of the group's members, associates and wings, the IRGC is already one of the most heavily sanctioned organizations in the world. Moreover, the unit's Quds Force has been on the executive order's "Specially Designated Nationals" list since 2007, which has frozen its U.S. assets and barred U.S. citizens and companies from interacting with it.

Ironically, a designation under the executive order deals a heavier financial blow than that of the foreign terrorist organization. But the latter label carries one critical advantage: criminal charges. Anyone, including non-U.S. citizens, who provides lodging, financial services or other aid to a foreign terrorist organization faces the possibility of prosecution in the United States. It's easy to imagine the economic and diplomatic problems that might arise if Washington were to add the IRGC to its list of foreign terrorist organizations. The employees of international firms doing business in Iran would have to tread carefully to avoid the threat of jail time, as would government officials receiving Iranian delegations traveling abroad, which often include members of the IRGC. Moreover, the United States has never designated a military unit of a sovereign state a foreign terrorist organization; should it break that pattern, other countries may follow its lead, perhaps even eventually treating prisoners of war as terrorists. Aware of these potential complications, the U.S. Defense Department and State Department have pressured the Trump administration not to rely on the Immigration and Nationality Act of 1965 to target the IRGC.

Of course, punishing the IRGC under the auspices of the executive order could have some influence over the group's capabilities. After all, the organization boasts an array of enterprises and shell companies that span the Iranian economy, and foreign firms will have to give extra due diligence to their operations in the country to ensure that they don't run afoul of Western sanctions. Nevertheless, Iran's foreign investment won't dry up, even if the IRGC becomes a less attractive partner for many international companies.

The Iranian government, moreover, will replace any revenue streams that the IRGC loses access to. In fact, the group's funding may even increase, thanks to its central role in the nation's security strategy and to the empowerment of Iran's hard-liners, who will oppose any attempt by President Hassan Rouhani to erode the IRGC's political and economic clout.

United Against the United States

Rouhani is not the IRGC's only domestic opponent, however. The group's pervasive power is a divisive issue in Iranian society, and the president has found the popular support needed to block some of its funds. That said, the IRGC's importance to the country's security hasn't generated the same amount of controversy. And as the United States has stepped up pressure on the IRGC over the past week, a rare display of unity has emerged between moderates like Rouhani and the conservative military group. That show of support will likely yield a boost in the IRGC's budget in the weeks ahead, just as Iranian lawmakers funneled $300 million to the Quds Force and the IRGC's ballistic missile program after the United States began ratcheting up tension earlier this year.

Still, it remains to be seen whether the IRGC's hard-line allies will be able take advantage of the political climate to boost their standing at home. In the last three elections, the country's hard-liners made a poor showing, and they remain in disarray today as they struggle to connect with the majority of Iranian youths. Perhaps it's no surprise that the camp has begun to pursue publicity stunts that were previously unheard of among conservatives, such as meetings with rappers and social media campaigns. The United States' renewed pressure against Iran may be the fuel they need to drive a rebranding of their image among voters. If so, Iran's hard-liners could make a comeback that enables them to block Rouhani's attempts to crack down on the IRGC's influence in Iranian politics. And if the United States is not careful, its effort to isolate the powerful military branch will only succeed in banding Iran's political factions together against it.