'A Mexican Standoff': Revolutionary Guards' Terrorist Designation Last Major Stumbling Block To Restoring Iran Nuclear Deal

After months of grueling negotiations, Iran and world powers appeared to be on the threshold of agreeing to restore a landmark 2015 nuclear deal.

But several last-minute snags have threatened to derail efforts to revive the agreement, which curbed Tehran’s sensitive nuclear activities in exchange for the lifting of international sanctions.

The biggest and most complicated stumbling block is Iran’s demand that the United States drop the powerful Islamic Revolutionary Guards Corps (IRGC) -- a branch of the Iranian armed forces that plays a significant role in the economy -- from its list of Foreign Terrorist Organizations (FTOs).

Tehran has said that the IRGC’s removal from the blacklist is a “red line.” Washington has not directly commented on the issue, although it said separate U.S. sanctions against the IRGC would remain in place under any agreement.

Observers said there could be a tradeoff, although they warned that the sensitivity of the matter could scupper a compromise.

In the United States, the issue is controversial given that American officials have accused the IRGC of creating instability and supporting militant groups in the region. The IRGC is also in charge of Iran’s controversial missile program. Meanwhile, for Tehran, the terrorist designation of the IRGC, a major center of power in the Islamic republic, is unacceptable.

“I think it's more likely than not that Washington and Tehran will find a way around this impasse to revive the JCPOA,” said Henry Rome, a senior analyst at the Eurasia Group in Washington, referring to the Joint Comprehensive Plan of Action, the formal name of the nuclear deal. “This will require some creativity and political cost, but I think there's enough incentive on both sides to push through this obstacle.”

“But it's clearly not guaranteed,” Rome told RFE/RL. “The FTO designation has attained a political significance that exceeds its practical implication, which makes compromise particularly challenging.”

'Both Sides Are Prone To Miscalculation'

In 2019, then-U.S. President Donald Trump designated the IRGC as a terrorist organization, marking the first time Washington had officially used that label on a foreign state institution. It came a year after Trump unilaterally withdrew the United States from the nuclear deal between Iran and world powers and reimposed harsh economic sanctions against Tehran.

Iran responded by gradually expanding its nuclear activities, shortening its so-called breakout period for developing nuclear weapons, a move that triggered alarm in Western capitals.

Despite the high stakes, Iran and the United States have not shown any signs that they will compromise on the IRGC’s blacklisting.

Ali Vaez, the director of the Iran Project at the International Crisis Group (ICG), compared the situation to “a Mexican standoff.”

“It’s very difficult to find a mutually acceptable formula and this is a situation like a Mexican standoff [in] that each side expects the other to concede because they think the other needs the deal more,” Vaez said during an online panel discussion on March 29. “The reality is that both sides need it and both sides are prone to miscalculation.”

Washington-based news outlet Axios, citing U.S. and Israeli sources, reported on March 16 that Washington was considering removing the IRGC from its terrorist blacklist in return for a “public commitment from Iran to de-escalation in the region.”

Tehran is accused of supporting Yemen’s Huthi rebels, who have been fighting a deadly war against a military coalition led by Saudi Arabia, a key U.S. ally and Tehran’s regional foe. The Huthis have staged cross-border assaults on Saudi Arabia, striking key energy facilities.

Meanwhile, Iranian-backed militias have been accused of launching attacks against U.S. security personnel and bases in Iraq. The U.S. presence in Iraq has long been a flash point for Tehran, but tensions spiked after a January 2020 U.S. drone strike near Baghdad airport killed top Iranian commander Qasem Soleimani.

The assassination infuriated Iran, which days later launched a ballistic missile attack on a military base housing international troops in Iraq that caused brain concussion injuries to some 100 U.S. troops. Iranian officials have threatened further retaliation, including targeting Trump administration officials.

The State Department on March 12 said it was paying more than $2 million per month to provide 24-hour security to former Secretary of State Mike Pompeo and a former top aide, both of whom it said faced “serious and credible” threats from Iran.

A source close to the U.S. negotiating team in Vienna, the venue of the nuclear talks, told RFE/RL’s Radio Farda this week that one of Washington’s main demands for delisting the IRGC was a commitment by Iran not to target Trump administration officials in retaliation for Soleimani’s killing.

In a written statement to Radio Farda, the State Department said it was “not going to respond to specific claims about what sanctions we would be prepared to lift as part of a mutual return to full implementation of the JCPOA.”

'The Most Absurd Of Obstacles'

State Department spokesman Ned Price told reporters on March 30 that several issues remain unresolved in the nuclear talks with Iran, adding that the onus was on Tehran to make those choices.

Iran’s Foreign Minister Hossein Amir-Abdollahian said on March 26 that the IRGC’s terrorist designation was a key stumbling block in the talks. But he suggested some flexibility, saying senior IRGC officials had said that the deal should not be held up over the issue if the accord serves the nation’s interests.

Iranian Foreign Minister Hossein Amir-Abdollahian (file photo)

Amir-Abdollahian, however, later said on Instagram that “red lines” should not be crossed. He quoted Ayatollah Ruhollah Khomeini, the late founder of the Islamic republic, who was quoted as saying, “I, too, am a revolutionary guard."

Vaez told RFE/RL that the FTO designation, which was seen as largely symbolic, has not “done anything to curtail the IRGC's influence.” In fact, he said, it had made the IRGC even “more brazen.”

“This is the most absurd of obstacles to restoring the nuclear deal,” Vaez added. “Keeping the FTO designation doesn't help the U.S. Lifting it won't help Iran.”

Before its terrorist designation, the IRGC had already been the target of numerous U.S. sanctions over its involvement in Iran’s missile program, its alleged human rights abuses and interference in Iranian elections, and its support for militant groups in the Middle East region.

Even amid the ongoing nuclear talks in Vienna, Washington has continued to target the IRGC and its affiliates with new sanctions.

On March 30, the Treasury Department announced sanctions against "an Iran-based procurement agent and his network of companies that procured ballistic missile propellant-related materials" for the IRGC.

RFE/RL Radio Farda correspondent Reza Haghighatnejad contributed to this report.