US special envoy for Iran Robert Malley speaks at the Doha Forum in Doha, Qatar on March 27.
Abu Dhabi CNN  — 

After weeks of signals from Iranian and Western officials that a deal to revive the 2015 Iran nuclear agreement was imminent, an escalation in rhetoric between Tehran and the United States over the weekend dampened hopes for a breakthrough.

US special envoy for Iran Robert Malley told CNN’s Becky Anderson in Doha on Sunday that a nuclear deal “is not around the corner and is not inevitable” due to outstanding issues that “matter deeply” to parties involved in the talks, one of which is Tehran’s demands regarding the elite Islamic Revolutionary Guard Corps (IRGC).

Iran’s insistence on reversing the designation of the IRGC as a Foreign Terrorist Organization (FTO) appeared to be the last major sticking point in talks, with neither side showing new signs of compromise.

Beyond nuclear compliance, what Iran is offering in return for the delisting remains unclear. US State Department spokesman Ned Price refused to answer a question last week on an Axios report claiming that Tehran would publicly commit to a de-escalation in the Middle East if the IRGC are removed as an FTO.

Saudi Arabia and the United Arab Emirates have both been struck by Yemen’s Iranian-backed Houthi rebels and most recently, drones hit an oil depot in the kingdom’s second largest city Jeddah, 20 miles away from a Formula 1 track during a practice session.

But on Saturday, the Houthis said they were suspending missile and drone strikes on Saudi Arabia for three days in a peace initiative they said could be a lasting commitment if the Saudi-led coalition stopped air strikes and lifted port restrictions in Yemen.

An elite wing of the Iranian military, the IRGC was established after the country’s 1979 revolution and is today at the forefront of Iran’s military operations in the region, including in Iraq and Syria. Its animosity to the US is deeply entrenched.

The group was designated an FTO by the US in 2019 under then-President Donald Trump’s “maximum pressure” campaign, which aimed to curb Tehran’s power in the region after the US withdrew from the nuclear agreement in 2018.

Iranian Foreign Minister Hossein Amir-Abdollahian appeared to hint at compromise on Saturday before walking back. He said in an interview with state television that senior IRGC officials urged him not to delay a nuclear agreement over “the issue of the IRGC.” It would be a “self-sacrifice” the group is making, he said.

Amir-Abdollahian’s remarks were met with a strong backlash in Iranian media. He later appeared to backtrack, saying “there is no crossing or compromise on the red lines [on delisting as an FTO] at all.”

When pressed to do so on Sunday, Malley didn’t rule out a delisting, only saying that sanctions on the group will remain “no matter what happens.”

Some analysts said that the terror designation has little more than symbolic value for both sides.

The implications of delisting the IRGC are only symbolic as sanctions predating the 2015 deal will continue to economically stifle the group, said Mehran Haghirian, director of regional initiatives at the Bourse & Bazaar Foundation.

“The FTO designation is superfluous,” added Ali Vaez, Iran project director for the International Crisis Group. “It doesn’t help the US; it doesn’t hurt Iran.”

“This is an absurd non-issue,” he said. “There is no other entity that is as sanctioned by the US as the IRGC,” he said.

Mohammad Marandi, a professor at the University of Tehran, said the designation matters because it gives the US a pretext to militarily target the group.

“When the United States and Iran both have a presence [in the Persian Gulf] and the two sides consider the other navy to be a terrorist organization, then are no lines for communication, and that could create major problems,” he said.

The Trump administration killed the head of the IRGC’s elite Quds Force Qassim Soleimani in a military operation in Iraq in 2020, less than a year after designating the IRGC as an FTO. Soleimani himself was designated a “global terrorist” by the US in 2011.

“The US murdered a senior Iranian military official… then for them to keep Iran on some terrorist organization list – that’s unacceptable for Iran,” said Marandi.

Tehran is unlikely to accept anything short of a full reversal of the FTO designation, said Vaez and Marandi. “There’s no middle ground on the issue,” added Vaez.

Iran realizes that the sanctions and the FTO designation are separate issues, the latter of which was a legacy of the Trump era, analysts said. “It was imposed symbolically by Trump,” said Haghirian. “They knew it wouldn’t have much of an impact.”

The Iranian foreign minister’s comments on state TV that later warranted a clarification were likely meant to say that the IRGC “have no problem about being remaining sanctioned – they’ll do what they need to do,” said Marandi. “The FTO is a different issue.”

With additional reporting from Adam Pourahmadi and Abbas Al Lawati, CNN

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