President Donald Trump has designated Iran's Revolutionary Guard Corps (IRGC) a foreign terrorist organization (FTO), the first time the United States has labelled another nation's military as a terrorist group.
Washington will continue to increase financial pressure and raise the costs on Iran "for its support of terrorist activity," Trump said in a statement on April 8.
Tehran responded in kind, announcing a couple of hours later that its top security council has designated the United States a "state sponsor of terrorism" and U.S. forces in the region "terrorist groups."
The United States has already blacklisted tens of entities and people for affiliations with the IRGC, but not the organization as a whole.
"This designation will be the first time that the United States has ever named a part of another government as an FTO," Trump said.
"It underscores the fact that Iran’s actions are fundamentally different from those of other governments."
"It makes crystal clear the risks of conducting business with, or providing support to, the IRGC," Trump said. "If you are doing business with the IRGC, you will be bankrolling terrorism."
U.S. Secretary of State Mike Pompeo said the designation will take effect in one week. Pompeo, speaking to the media in Washington, warned all banks and businesses to end dealings with the IRGC.
The move blocks any assets that IRGC entities may have in U.S. jurisdictions and bars Americans from any transactions with it.
When it takes effect, it will allow Washington to deny entry to people found to have provided the IRGC with "material support" or prosecute them for sanctions violations.
State news agency IRNA reported shortly afterwards that Iran's Supreme National Security Council has labelled the United States a "state sponsor of terrorism."
The Council blasted Washington's move as an "illegal and foolish act," and said that in response, it "declares that it considers the regime of the USA a 'state sponsor of terrorism' and 'the Central Command of America, known as CENTCOM' and all forces related to it 'terrorist groups'," the statement posted by IRNA said.
CENTCOM's area of command covers multiple war zones and hotspots including Afghanistan, Iraq, Syria, Yemen, and the Persian Gulf.
The decision came after Foreign Minister diplomat Mohammad Javad Zarif urged President Hassan Rohani to place CENTCOM on Tehran's list of "terrorist" groups.
Zarif also sent a protest letter over the U.S. designation to the Swiss Embassy in Tehran, which looks after the U.S. interests in Iran.
Critics had warned that such a step could open U.S. military and intelligence officials to similar actions by unfriendly countries.
But U.S. National Security Adviser John Bolton said the move proves America's determination to step up the pressure on Tehran to make it stop using terrorism as a "tool of statecraft."
"Today’s unprecedented move to designate the IRGC as a Foreign Terrorist Organization demonstrates our commitment to maximize pressure on the Iranian regime until it ceases using terrorism as tool of statecraft," Bolton tweeted.
"The corrupt IRGC invests in terrorism, while Iran’s people suffer."
The Guards were formed after the 1979 Islamic revolution with a mission to protect the regime, as opposed to more traditional military units that defend borders.
Over the decades, the IRGC has amassed strong political and economic influence inside Iran, while its elite Quds Force, named for the Arabic word for Jerusalem, supports Iranian allies, including Syrian President Bashar al-Assad and Lebanon's Hizballah movement.
The U.S. move was welcomed by Israel's Prime Minister Benjamin Netanyahu, who thanked Trump, saying the designation "serves the interests of our countries and of countries in the region."
Netanyahu wrote on Twitter following the announcement, "Thank you, President @realDonaldTrump for your decision to designate the Islamic revolutionary guards as a terrorist organization. Once again you are keeping the world safe from Iran aggression and terrorism."
Israel has long seen Iran Iran as its greatest foe, citing its leaders' hostile rhetoric, suspect nuclear program, development of long-range missiles, and support for anti-Israeli militant groups such as Hizballah.