As Iran Deal Goes into Effect, Congress Moves to Sanction IRGC

The International Atomic Energy Agency recently closed its investigation into the possible military dimensions of Iran’s nuclear program, thus paving the way for lifting U.S., UN, and EU sanctions as stipulated in this summer’s Iran nuclear deal. The U.S. Congress, however, is pushing back. Lawmakers in both chambers have introduced bills to levy significant sanctions on the Islamic Revolutionary Guard Corps (IRGC) – likely to be the deal’s chief beneficiary – and to label the entire organization a foreign terrorist organization.

The bills – introduced or supported by both Democrats and Republicans in the House and in the Senate – include the IRGC Sanctions Act, Quarantining the Ayatollah’s State-Sponsored Aggression and Militancy (QASSAM) Act, Iran Terror Finance Transparency Act, IRGC Terrorist Designation Act and Iran's Revolutionary Guard Corps Sanctions Implementation and Review Act. They contain several policy initiatives that would curb the Guard’s global commercial empire.

The bills call for, inter alia, designating the entire IRGC as a foreign terrorist organization (the IRGC Terrorist Designation Act) and creating an IRGC watch list to provide transparency for companies looking to invest in Iran (IRGC Sanctions Act). Under the QASSAM Act, Treasury would be required to lower the threshold for companies to be considered IRGC-owned or controlled, thereby bringing hundreds of front companies, shipping assets, and financial institutions under greater scrutiny.

The Iran's Revolutionary Guard Corps Sanctions Implementation and Review Act would provide for more effective sanctions against the IRGC or any of its officials, agents, or affiliates to counter support for international terrorism and assistance to the Assad regime in Syria. Lastly, the IRGC Sanctions Act would limit licenses granted to entities that have business relationships with the Guard and impede efforts to remove Iran from the State Department’s list of state sponsors of terrorism until Congress approves such a move. 

The Obama administration is adamant that the existing legal structure of statutes and executive orders suffices to keep the IRGC from Iran’s post-deal economic windfall. However, under the current system, the White House has failed to designate hundreds of Guard companies and thousands of its top officials. Proponents of the legislation thus argue that only by designating the IRGC as a terrorist organization (as opposed to for nuclear proliferation, human rights, or the war in Syria) can Washington deter businesses from engaging with it.

The timing of the proposed legislation could also prove crucial. Trade delegations from most European countries have already visited the Islamic Republic hoping to rekindle commercial relationships. The IRGC is set to take full advantage, given its dominant role across all sectors of the Iranian economy, its ownership of some 20 percent of the Tehran Stock Exchange’s value, and its influence over the allocation of publicly funded projects.

Once the bulk of Iran sanctions are lifted on Implementation Day (likely in January), the existing legal structures to limit the power of the IRGC will be insufficient, and will not block the Guard’s business interests from the benefits the Iran deal will generate.  As the deal is implemented, Congress will have to move swiftly to minimize the risk that renewed trade relations with Tehran enrich the Guard’s already full coffers.

Tyler Stapleton is Deputy Director of Congressional Relations at Foundation for Defense of Democracies, where Emanuele Ottolenghi is a Senior Fellow.