The US consideration of removing the IRGC from its FTO blacklist

Left: Then-US President-elect Joe Biden on January 14, 2021, in Wilmington, Delaware (AP Photo/Matt Slocum); Right: Iranian President Hassan Rouhani speaks in a meeting in Tehran, Iran, December 9, 2020. (Iranian Presidency Office via AP)
Left: Then-US President-elect Joe Biden on January 14, 2021, in Wilmington, Delaware (AP Photo/Matt Slocum); Right: Iranian President Hassan Rouhani speaks in a meeting in Tehran, Iran, December 9, 2020. (Iranian Presidency Office via AP)

A brief consequences and risks analysis of the possible move 


i. Iran’s Islamic Revolution Guards Force –General Background

Soon after the Islamic Revolution of 1979, the Iranian Islamic Revolution Guards Force (IRGC) emerged with a clear, yet subjective task: defend Iran’s Islamic systems and serve as the guardian of the revolution. The IRGC, and its elite force Quds, soon became a key player in the Iranian attempt of exporting the Islamic Revolution – an integral vision of the Islamic Revolution according to Ruhollah Khomeini’s ideology. It began to groom, train and fund Iran’s regional proxies in Iraq, Lebanon, Yemen, and the Palestinian territories, many of which are designated terror groups according to OFAC (US Office of Foreign Assets Control), NBCTF (National Bureau for Counter Terror Financing of Israel) and more.

On April 8, 2019, following the Iranian involvement in the Middle Eastern region, Donald Trump’s administration designated IRGC as a Foreign Terrorist Organization (FTO) in an unprecedented step of designating a part of another government as an FTO. Such declaration has significant meanings varying from direct sanctions towards Iran’s IRGC (such as seizing and freezing assets of individuals who are associated with the IRGC) to indirect pressure toward whoever tries to financially support the IRGC. A good example of the designation’s effect is visible in the successful actions by the US on December 7, 2021, when it seized and forfeited IRGC’s missiles and petroleum.

ii. Removing the IRGC from the American blacklist– Possible Reasoning

In recent days, as part of the nuclear talks and negotiations in Vienna, the US weighs reversing its 2019 designation and dropping the IRGC from the sanctions list. Such a decision, explained by the U.S, is part of “difficult decisions it is ready to make in order to revive the nuclear deal with Iran”, which provided no longer explanations.

The publications regarding the possible American decision led to an Israeli response urging the Americans not to proceed with the possible move, alongside opposition from within the US.

One of the possible reasons for the American consideration of removing the IRGC from the sanction list might strongly correlate with the current situation in Europe. Russia, facing various global sanctions, is currently unable to conduct business with other countries and as a result, cannot export its gas and oil, mainly Crude Petroleum. Iran, currently facing sanctions as well, exports the same type of goods, which are gas and oils, mainly Crude Petroleum. Removing the IRGC from the American Blacklist will actually allow Iran to export since according to research, the IRGC is strongly involved in Iran’s economic system, especially in the oil and gas sectors and other import-export businesses.

The American intention of dropping the IRGC from the sanction list may be an American attempt to legitimize and authorize Iran as the new exporter of said goods instead of Russia. It may show American intentions of finding new channels for global gas and oil trade due to the current shortage. This move may also pressurize Vladimir Putin to end the current war in Ukraine in an attempt of preventing Russia from losing its main export field.

iii. Removing the IRGC from the American blacklist list – Possible Consequences for Israel

  1. Close proximity threats – Hezbollah, Hamas, and Palestine Islamic Jihad (PIJ)

Removing the IRGC from the sanctions list will make money and equipment transfers from Iran to Hezbollah, Hamas, and the PIJ easier. The three organizations’ already large budget (estimated at over 800 million dollars provided by Iran to the three organizations every year) will most likely increase due to the lack of sanctions, leading to a larger arsenal of weapons and to the increase of more advanced weaponry in the hands of these organizations. One increasing threat that became more prominent in recent years is the use of drones for various missions such as reconnaissance missions and offensive suicide drones missions. A large portion of these drones is either provided by Iran or built using funds that came from the Iranian regime. Removing the IRGC from the sanctions list might cause Israel to face an increasing number of drones’ incident, like that of February 2022. Larger arsenals, technologically advanced weapon systems, and more funds, may cause Hamas, Hezbollah, and the PIJ to feel more capable and as a result more daring, to a point where a multi-front conflict will become more probable.

2. Regional threats – Iranian proxies in Iraq and Yemen

According to several publications, the IRGC has recruited and armed up to 200,000 fighters across the Middle East. In 2018 for example (prior to the US designation), the IRGC transferred ballistic missiles and drones to militias in Iraq and Yemen and even helped finance the establishment of factories for building more missiles in these countries. As seen with Hezbollah and Hamas, removing the IRGC from the American blacklist will also make transferring funds and arms to Iraq and Yemen easier and as a result, the range and accuracy of said weapons will exponentially grow to a point where it may soon pose a threat to Israel.

3. Global threats – Iranian involvement in the Russian-Ukrainian conflict

Removing the IRGC from the American blacklist may cause other countries to follow this decision, rendering money transfers from these countries to IRGC-backed entities a lot easier. As published by the General Staff of the Armed Forces of Ukraine, mercenaries from Syria and Hezbollah were recruited to fight in the Russia-Ukraine war. Such involvement may cause IRGC-backed forces to infiltrate Europe, transfer funds from Europe to the US and from the US to the IRGC and its proxies.  The path of the funds may soon shorten if Europe ends up removing the IRGC from its blacklists as well.

iv. Conclusions

Both the Israeli and the American condemnations regarding the possibility of the IRGC’s removal from the sanction list seem to be attempts of preventing the Iranian dream of exporting the revolution using its proxies to Israel’s doorstep. According to the US State Department spokesperson Ned Price, sanctions relief is at the heart of negotiations to revive the nuclear deal. That means that trying to prevent the US from removing the IRGC from its sanctions list is not only a defensive move by Israel against Iran’s proxies but might also be an indirect strategic move against the nuclear deal Israel strongly opposes.

The US government’s possible attempt of replacing Russia’s oil and gas with Iran’s may lead to a richer Iran and as a result- more dangerous. It may lead to bigger threats to Israel due to stronger Iranian proxies in the region. These threats might become more prominent if, using the IRGC, Iran will be able not only to export its gas and oils but also ayatollah Khomeini’s Islamic revolution.

About the Author
Shay is currently a BA student in Middle-Eastern Studies and Political Science at Bar-Ilan University and interns at the Institute for National Security Studies (INSS).
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