WASHINGTON A proposal the Trump    administration is considering to designate Iran's Islamic    Revolutionary Guard Corps a terrorist organization has stalled    over warnings from defense and intelligence officials that the    move could backfire, according to officials familiar with the    matter.  
    "If you do that, there is no way to escalate, and you would    foreclose any possibility of talking to the Iranians about    anything," one of the officials said, speaking on the condition    of anonymity.  
    Momentum behind a possible presidential order has slowed amid    an internal debate that has included concerns it could    undermine the fight against Islamic State, draw opposition from    key allies, torpedo any U.S.-Iran diplomatic prospects, and    complicate enforcement of the Iran nuclear deal, U.S. and    European sources said.  
    The proposal - part of a broader effort to make good on    President Donald Trump's vow to take a tougher line against    Iran - would, if implemented, take the unprecedented step of    blacklisting the entire IRGC as a "Foreign Terrorist    Organization."  
    That would go far beyond the targeted sanctions already imposed    on individuals and entities linked to the IRGC, Iran's most    powerful security force, which also controls large swathes of    the Iranian economy and wields great political influence.  
    The proposal has been in the works for weeks, and was    originally expected to be rolled out this month. But while the    idea remains under consideration, it is unclear when  or even    if  an announcement might be forthcoming, according to the    sources, who spoke on condition of anonymity.  
    The White House did not immediately respond to a request for    comment. Iran denies any involvement in terrorism, though it is    listed by the State Department along with Syria and Sudan as a    state sponsor of terrorism.  
    A decision on the matter was complicated by the Feb. 13    resignation of Trump's national security adviser, Michael    Flynn, over disclosures that he discussed U.S. sanctions on    Russia with the Russian ambassador before taking office. Flynn    was one of the Trump White House's leading Iran hawks, and was    spearheading the crafting of a strategy for confronting Tehran.  
    DEFENSE, INTELLIGENCE OFFICIALS    RAISE OBJECTIONS  
    Even before Flynn's departure, however, officials from the    Pentagon and U.S. and foreign intelligence agencies had raised    objections to naming the IRGC a terrorist group.  
    Such a move would be the first time the 1996 Foreign Terrorist    Organizations law, which has been applied to militant groups    such as al-Qaeda and Islamic State, has been wielded against an    entire institution of a foreign government, potentially    subjecting it to a wide range of U.S. sanctions.  
    It likely would complicate the U.S. fight against Islamic State    in Iraq and Syria, defense and other officials said, also    speaking on the condition of anonymity. Shi'ite militias backed    by Iran and advised by IRGC fighters are battling Sunni    jihadist groups there, putting them on the same side as    American forces.  
    It could encourage Iranian-backed forces in Iraq and Syria to    curtail action against Islamic State and possibly even sponsor    actions against U.S.-backed or American forces in Iraq, one    official said. The Revolutionary Guards answer to Iranian    Supreme Leader Ayatollah Ali Khamenei.  
    Naming Iran's most influential military force a terrorist group    also could further inflame proxy conflicts elsewhere, including    in Yemen, that the United States and its regional allies say    Iran is fueling, the officials said. Iran denies those    allegations.  
    "That move could potentially backfire" in Iran's domestic    politics, too, said one of the officials. "The Iranians are a    major source of trouble ... but those kind of moves would only    help the hardliners" in Iran and undercut more moderate leaders    such as Iranian President Hassan Rouhani.  
    In addition, said another of the officials, adding the IRGC to    the terrorist list would cause friction with U.S. European    allies, who in the wake of the 2015 nuclear agreement are    trying to rebuild business ties to Iran, which often means    contact with the Revolutionary Guard and the companies it    controls.  
    For now, the officials said, the discussion of naming the IRGC    a terrorist organization is still in play, but apparently on    the back burner. A European security source, speaking on    condition of anonymity, said U.S. counterparts told him the    order is on hold.  
    A failure to go forward with the IRGC terrorist designation,    which also has gained some support among U.S. lawmakers, could    disappoint those looking for a strong response to Iran's recent    ballistic missile test.  
    The new administration warned Tehran at the time that it was    being put "on notice" and then imposed a series of new    sanctions on Iranian individuals and companies, which a White    House official said was just an "initial" step.  
    (Additional reporting by Mark Hosenball and Phil Stewart;    Writing by Matt Spetalnick; Editing by John Walcott and James    Dalgleish)  
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Trump proposal for terrorist listing of Iran Revolutionary Guard in limbo: sources - Reuters