WASHINGTON (Reuters) - U.S. President Donald Trump's administration is considering a proposal that could lead to potentially designating Iran's powerful Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization, according to U.S. officials familiar with the matter.
The officials said several U.S. government agencies have been consulted about such a proposal, which if implemented would add to measures the United States has already imposed on individuals and entities linked to the IRGC.
RELATED: United States and Iran Relations throughout time
United States and Iran Relations throughout time
United States and Iran Relations throughout time
Return of the hostages from Iran as they step off the plane in Germany. Barry Rosen is second from the bottom waving with no glasses and a beard. He has just announced that he will be going back to Iran to meet with his captors. The hostages were kept over a year in captivity after the US Embassy was stormed during the Iranian Revolution. Relations with Iran and the US have been improving lately. (photo by Tim Chapman)
A Kurdish family having fled northern Iraq, carry all their worldly possessions, reach the border town of Nossod, Iran. Saddam Hussein crushed the Kurdish uprising in northern Iraq in the aftermath of 1991 Gulf War led by the US and allied forces. (Photo by Kaveh Kazemi/Getty Images)
An Iranian woman pets a dove caged in the belly of a replica of the Statue of Liberty at the former US embassy compound November 3, 2001 in Tehran, Iran. Iranian authorities opened the former embassy to the public for the first time since the 1979 Islamic revolution toppled the US-backed Shah which ultimately led to the breaking of relations between Washington and Tehran. (Photo by Keivan/Getty Images)
Reza Pahlavi, son of the late Shah of Iran Mohammad Reza Shah Pahlavi, speaks to New York University students December 4, 2001 in New York City. Pahlavi spoke of the need to root out terrorism and the need for democracy in Iran. (Photo by Mario Tama/Getty Images)
An Iranian man teaches his son the 'death to America' chant during a demonstration after Friday prayers April 5, 2002 in Tehran. The protesters opposed the Israeli incursion into Palestinian-controlled territories. (Photo by Keivan/Getty Images)
Deputy Secretary of State Richard Armitage greets people before giving testimony before the U.S. Senate Foreign Relations Committee on Capitol Hill October 28, 2003 in Washington DC. The Committee is hearing testimony on security threats and the U.S. policy toward Iran. (Photo by Mark Wilson/Getty Images)
An Iranian girl rests during a meeting of the conservative group, the Coalition of Builders of Islamic Iran, in Tehran February 16, 2004. The group has taken a tough stance on the country's nuclear prerogatives and a moderate line on US-Iranian relations and the imposition of Islamic social regulations. The main reformist parties are staying away after a conservative-run political vetting body, the Guardians Council, barred some 2,300 people -- most of them reformists -- from even standing in the February 20 polls. (Photo credit: BEHROUZ MEHRI/AFP/Getty Images)
A man holds an effigy of U.S. President George W. Bush during a protest against the U.S.-led occupation of Iraq in Enqelab Square May 19, 2004 in Tehran, Iran. Demonstrators reportedly hurled petrol bombs, firecrackers and stones at the British embassy. (Photo by Majid/Getty Images)
This 18 January file photo shows Secretary of State-designate Condoleezza Rice testifying before the Senate Foreign Relations Committee during her confirmation hearing on Capitol Hill in Washington, DC. US Secretary of State Condoleezza Rice will discuss the war in Iraq and tensions with Iran when she meets Chancellor Gerhard Schroeder on 04 February 2005.(Photo credit: TIM SLOAN/AFP/Getty Images)
U.S. Senator Dick Lugar (R-IN) (C) speaks to the media after addressing the U.N. Security Council at the United Nations February 6, 2006 in New York City. Lugar, along with other Senate Foreign Relations Committee members George Voinovich (R-OH) (R) and Norm Coleman (R-MN), spoke on reform at the U.N., Iran and energy conservation. (Photo by Spencer Platt/Getty Images)
Iranian Foreign Minister Manouchehr Mottaki speaks during a meeting with relatives of the seven Iranian detainees arrested in Iraq by US forces, in Tehran, 18 May 2007. US troops seized seven Iranians in the northern Iraqi city of Arbil on 11 January from what Iran claims was an official consular building. Mottaki said after meeting the families of the detainees that Iran maintains that they were diplomats working for a 'consulate'. (Photo credit: ATTA KENARE/AFP/Getty Images)
Iranian students walk past an anti-US mural on the wall of the former US embassy in Tehran 24 October 2007. Twenty-eight years ago, 19-year-old Iranian chemistry student Massoumeh Ebtekar agreed to join other students in holding more than 60 Americans captive at their embassy in Tehran, an event that was to last 444 days and leave a rupture in US-Iranian relations that has yet to be healed. For Ebtekar, who was elected last year as a member of Tehran city council, there is no contradiction between her prominent role in the embassy siege and her efforts today for greater moderation in the Islamic republic. (Photo credit: ATTA KENARE/AFP/Getty Images)
A US soldier carries on March 1, 2008 a platter of mutton and rice offered to the troops by the mayor of the village of Nafet Khana on the Iraq-Iran border, which was destroyed during the 1980-88 Iraq-Iran war. An Iranian delegation left Baghdad for home today without holding talks with officials from archfoe the United States on the security situation in Iraq, an Iranian official said. Iran and the United States, which have had no diplomatic relations since 1980, held three rounds of talks about Iraq last year, but a fourth round scheduled for last month was postponed. AFP PHOTO/PATRICK BAZ (Photo credit should read PATRICK BAZ/AFP/Getty Images)
WASHINGTON, DC - July 09: Undersecretary of State William Burns testifies during the Senate Foreign Relations hearing on Iran. On the same day Iran test-fired missiles in a show of force in the Persian Gulf, the Bush administration Wednesday sought to downplay the country???s power and influence. ???For its part, Tehran seems to relish heightening concerns by promoting the illusion that Iran is on the ascendance,??? Undersecretary of State William Burns said in prepared testimony. ???However, Iran is not 10 feet tall, nor is it even the dominant regional actor.' (Photo by Scott J. Ferrell/Congressional Quarterly/Getty Images)
Japanese Akiko Saberi, mother of US-Iranian journalist Roxana Saberi, holds press cards and ID's for her jailed daughter at the family's house in Tehran on April 18, 2009. An Iranian revolutionary court has sentenced Roxana Saberi, 31, to eight years in jail on charges of spying for the United States, her lawyer said. AFP PHOTO/ATTA KENARE (Photo credit should read ATTA KENARE/AFP/Getty Images)
Iranian nuclear scientist Shahram Amiri stands with his father upon arrival at Imam Khomeini Airport in Tehran on July 15, 2010. Amiri, who claimed he was 'abducted' by US spies last year, denied that he was a nuclear scientist, but said he was questioned by Israelis during his 'harsh' captivity. Amiri had gone missing from Saudi Arabia in June 2009 while on a pilgrimage and surfaced in Iran's Interests Section in Washington on July 13, 2010. Upon his arrival in Tehran he immediately told reporters that he was just a 'simple researcher'. Iranian officials claim he was kidnapped by the Central Intelligence Agency of the United States. US officials have denied these accusations. AFP PHOTO / ATTA KENARE (Photo credit should read ATTA KENARE/AFP/Getty Images)
NEW YORK - JULY 30: (L to R) Laura Fattal, Cindy Hickey and Nora Shourd, mothers of three U.S. Citizens being detained in Iran, hold photos during a protest outside the Iranian mission to the United Nations on July, 30, 2010 in New York City. Josh Fattal, Shane Bauer, and Sarah Shourd, have been held by Irainian authorities since July 31, 2009 after they were detained along the Iraq and Iran border and accused of spying. (Photo by David Goldman/Getty Images)
NEW YORK, NY - SEPTEMBER 25: Josh Fattal (C) and Shane Bauer (R), two American hikers released after spending more than two years imprisoned in Iran, were joined by Sarah Shourd (L) and family members in front of a press-filled conference room at the Parker Meridien New York on September 25, 2011 in New York City. Fattal, Bauer, and Shourd were charged with trespassing and espionage, after allegedly crossing the border between Iraq and Iran on a hiking trip. (Photo by Michael Nagle/Getty Images)
Senator John McCain, a Republican from Arizona, right, and U.S. Secretary of State Hillary Clinton talk during a Senate Foreign Relations Committee nomination hearing in Washington, D.C., U.S., on Thursday, Jan. 24, 2013. Senator John Kerry stressed the need to prevent Iran from acquiring nuclear weapons. He described the 'immediate, dangerous challenges' facing the nation as he seeks confirmation to become secretary of state. Photographer: Andrew Harrer/Bloomberg via Getty Images
WASHINGTON, DC - JULY 22: Ali Rezaian looks at a picture of his brother, Washington Post Tehran bureau chief Jason Rezaian, after a news conference at the National Press Club July 22, 2015 in Washington, DC. The news conference was to give an update on the case of Jason Rezaian, who is being held in Evin Prison in Iran since July 22, 2014. (Photo by Alex Wong/Getty Images)
Sarah Hekmati(R), sister of US Marine Corps veteran Amir Hekmati, speaks about her brother May 19, 2014 during a vigil held for him in Lafayette Park across from the White House in Washington, DC. The vigil was held on the 1,000th day of Amir's imprisonment in Iran. Amir is an Iranian-American detained in Iran while visiting his grandmother. Falsely accused of being a spy, he was detained in August of 2011, held in solitary confinement for months and hidden by the walls of Irans Evin prison. He was sentenced to death in January of 2012, the first American to receive the death penalty in Iran in over 33 years. AFP PHOTO / Karen BLEIER (Photo credit should read KAREN BLEIER/AFP/Getty Images)
Committee chairman Senator Bob Corker(L) , R-TN, and ranking member Senator Benjamin L. Cardin , D-MD, shake hands before a meeting of the Senate Foreign Relations Committee on Capitol Hill April 14, 2015 in Washington, DC. The committee met to debate and vote on S.615, the Iran Nuclear Agreement Review Act of 2015. AFP PHOTO/BRENDAN SMIALOWSKI (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)
UNITED STATES - JULY 23: Sen. Marco Rubio, R-Fla., takes his seat for the Senate Foreign Relations Committee hearing on the Iran Nuclear Agreement on Thursday, July 23, 2015. Secretary of State John Kerry, Energy Secretary Ernest Moniz, and Treasury Secretary Jack Lew testified. (Photo By Bill Clark/CQ Roll Call)
Discover More Like This
BACK TO SLIDE
The IRGC is by far Iran's most powerful security entity, which also has control over large stakes in Iran's economy and huge influence in its political system.
Reuters has not seen a copy of the proposal, which could come in the form of an executive order directing the State Department to consider designating the IRGC as a terrorist group. It is unclear whether Trump would sign such an order.
The White House did not immediately respond to a request for comment. Iran denies any involvement in terrorism.
Several draft orders on other topics have been circulated among U.S. agencies, only to be rejected or postponed by the Trump administration. Reuters reported last week that officials were debating whether to declare the Muslim Brotherhood a terrorist organization, but that decision appears to have been indefinitely postponed.
Naming Iran's single most powerful military and political institution as a terrorist group could have potentially destabilizing effects, including further inflaming regional conflicts in which the United States and regional arch-rivals blame Iran for interference. Iran denies those allegations.
It would also likely complicate the U.S. fight against Islamic State in Iraq, where Shi'ite militias backed by Iran and advised by IRGC fighters are battling the Sunni jihadist group.
Some of Trump's more hawkish advisors in the White House have been urging him to increase sanctions on Iran since his administration began to take shape. After tightening sanctions against Iran last week in response to a ballistic missile test, White House officials said the measures were an "initial" step.
U.S. Gulf allies have long favored a tougher U.S. stance against Iran, whom they blame for regional interference.
But officials said the process for issuing potentially controversial orders has slowed considerably in the wake of the political and legal uproar over Trump's order to ban entry to the United States from seven majority-Muslim countries, which is now the focus of a federal appeals court battle.
The United States has already blacklisted dozens of entities and people for affiliations with the IRGC. In 2007, the U.S. Treasury designated the IRGC's Quds Force, its elite unit in charge of its operations abroad, "for its support of terrorism," and has said it is Iran's "primary arm for executing its policy of supporting terrorist and insurgent groups."
A designation of the entire IRGC as a terrorist group would potentially have much broader implications, including for the 2015 nuclear deal negotiated between Iran and the United States and other major world powers.
The nuclear deal, which has been harshly criticized by Republicans in Congress and Trump for giving Iran too much and not placing tight enough restrictions on the country, granted Iran relief from most Western sanctions in return for curbs on its nuclear program.
Reuters reported last week that the IRGC designation is among the proposals being considered as part of an Iran policy review in the Trump administration. The objective would be to dissuade foreign investment in Iran's economy, because of the IRGC's involvement in major sectors including transportation and oil. In many cases, that involvement is hidden behind layers of opaque ownership.
"The new administration regards Iran as the clearest danger to U.S. interests, and they've been looking for ways to turn up the heat," said a senior U.S. official who has been involved in what he called a broad review of Iran policy.
The official said that rather than tearing up the nuclear agreement, a step he said even Israel and Saudi Arabia oppose, the White House might turn instead toward punishing Iran for its support for Lebanese militant group Hezbollah, the Houthi rebels in Yemen, and some Shiite forces in Iraq, as well as covert support for Shiites who oppose the Sunni regime in Bahrain, and cyber attacks on Saudi and other Gulf Arab targets.
But sanctioning the IRGC could backfire, this official warned. It could strengthen the hardliners and undercut more moderate leaders such as Iranian President Hassan Rouhani, and encourage Iranian-backed forces in Iraq and Syria to curtail any action against Islamic State in Syria and Iraq and perhaps even sponsor actions against U.S.-backed or even American forces battling Islamic State in Iraq.
The Revolutionary Guards answer to Iranian Supreme Leader Ayatollah Ali Khamenei, whose power far surpasses that of Rouhani.
"The Iranians will not take any U.S. action lying down," said the official. "They may not act quickly or in the open, but there is a danger of an escalating conflict."
Current U.S. sanctions include penalties for foreign companies which knowingly conducting "significant" transactions with the Revolutionary Guards, or other sanctioned Iranian entities. However, many companies in which the Revolutionary Guards have an interest in or own are not blacklisted, and have been able to sign foreign deals.
Sanctions lawyers say the fine print of existing U.S. sanctions allows foreign companies to continue to deal with some IRGC-held firms indirectly.
(Reporting by Mark Hosenball, John Walcott, Jonathan Landay and Lesley Wroughton; additional reporting by Jeff Mason and Yeganeh Torbati; Editing by Yara Bayoumy and Michael Perry)