Gigot: Iran’s Revolutionary Guard Corps controls much of Iran’s national economy, including construction, banking and telecommunications. It also oversees the regime’s ballistic missile program. So what does the terrorist designation mean for the IRGC and for the future of U.S.-Iran relations? Let’s ask Mark Dubowitz, the chief executive of the Foundation for Defense of Democracies, where he heads up the Iran program. So welcome, good to see you.
Dubowitz: Thanks Paul.
Gigot: Do you agree with the designation of the IRGC?
Dubowitz: I do, I have long supported it. It’s been under discussion for about 11 years in this town and I think it’s long past the time to finally recognize the IRGC as the terrorists they are, they’ve been killing and maiming thousands of Americans for years and the argument against it, which is, we shouldn’t call the terrorists terrorists because they might act like terrorists I think is a ridiculous argument.
Gigot: So what does the designation mean in practical terms? What does it allow us to do to the IRGC and how does it constrict their behavior in ways that weren’t possible before?
Dubowitz: So we are adding the IRGC to the Foreign Terrorist Organization list, there are about 60 terrorist organizations on that list, which include Al-Qaeda and ISIS and Hezbollah, Hamas, so again recognizing this as a leading terrorist organization, one of the leading terrorist organizations in the world. It has huge practical implications for anybody who wants to do business with Iran because 20-40% of the total economy is controlled by the IRGC, so if you do business with key strategic sectors of Iran’s economy, you’re doing business with a terrorist organization, and that’s a huge risk: legal, civil and reputational for companies.
Gigot: So if you are a, let’s say a German or a British bank and you want to finance something that the IRGC has a big stake in, in Iran, you would then risk punishment by the United States if you do that. Is that right?
Dubowitz: That’s right, you would risk criminal prosecution, being denied visas to enter the United States for you, potentially your family, and even though the IRGC has been designated before, this new designation under the Foreign Terrorist Organization State Department law means that if you’re providing any kind of material support at any level: financial, technical, advisory, any kind of training to the IRGC, in any capacity, you can be designated. And not only if there’s a U.S. person, but a foreign person, and not only if there’s a nexus with the U.S. financial system or a U.S. market, but even if there’s no nexus, if you’re providing any kind of support, you can find yourself in a U.S. jail.
Gigot: What’s been the reaction over the world? We know what the Iranian reaction is, but what about Europe and elsewhere, and China or Asia, where there are some people who do business in Iran? What’s been their reaction?
Dubowitz: Their reaction has been interesting, Paul. On the one hand, everybody says this is kind of earth-shattering and the IRGC is going to retaliate and they’re going to you know kill Americans, and this is a terrible decision by the Trump administration. But in the same breath they’ll tell you this is unnecessary and redundant and we already have laws that actually prohibit business with the IRGC. So you can’t really have it both ways. I think the reality is that the reaction is what it should be, and that is it makes key strategic sectors of Iran’s economy radioactive, and for anybody who continues to do business with the Islamic Republic of Iran, they should be thinking twice about that decision.
Gigot: Well you’ve raised the problem, a potential problem of retaliation and look, Iran has retaliated before, even if they try to keep their fingerprints off it through terrorism. Is there a risk to U.S. diplomats or U.S. soldiers in the Middle-East, or say Iraq, where Shiite militias that answer to Iran are in relative close proximity to U.S. troops?
Dubowitz: There has always been a risk to U.S. individuals, U.S. assets because the Islamic Republic of Iran has been at war with the United States for 40 years. So I mean the causal relationship, many people get this backwards: they’re provoking, they’re aggressive, they’re killing, they’re maiming, and the United States needs to react to that, and the worst way that we can react to that is by doing nothing, by showing that there will be no consequences for this kind of aggressive behavior. So I think it’s long past the time for the United States to finally be drawing a clear line for the IRGC that any kind of action, any kind of damage to the United States, our people and our assets will be met with all instruments of American power.
Gigot: Ok, so we have all these policies that the administration has put forward on Iran, try to isolate and pressure the regime, they call it the maximum pressure campaign. Is there any evidence that it in fact is working in a way that would change Iran’s behavior?
Dubowitz: So there was an interesting article about two weeks ago by Ben Hubbard from the New York Times who actually wrote a very detailed article, showing that as a result of this maximum pressure campaign, the regime in Iran is having to make a fundamental choice between guns and butter. And by having to make that choice they’re cutting payments and credit lines and support to Shiite militias, to Hezbollah fighters, and there’s a real financial squeeze now for these terrorist organizations and proxies that Iran has long supported. The nuclear deal, Paul gave Iran, it didn’t have to make that fundamental choice, it could have guns and butter and now that it’s having to make that choice its economy is struggling, people are on the streets protesting, and at the same time it’s having to cut these transfer payments to these dangerous regimes and surrogates, so it is making that kind of difference.
Gigot: So it’s making a difference on having them pull back from some of their promotion of terror activities and militias, but not necessarily in the nuclear program. And you’ve got about ten seconds here.
Dubowitz: Yeah they haven’t made that fundamental decision to come back to the table to negotiate, which is why I think the Trump administration needs to take the maximum pressure campaign from six where it is on the sanctions dial, all the way to eleven.
Gigot: Alright, thank you Mark Dubowitz, appreciate it.
Dubowitz: Thanks so much.