CHATHAM HOUSE The EU’s IRGC terrorist designation marks a major shift on Iran Europe has realized that engaging Tehran without leverage, interlocutors or credible pathways to change is unsustainable. But it should not abandon Iranians altogether. Expert comment Published 5 February 2026 —

 CHATHAM  HOUSE

The EU’s IRGC terrorist designation marks a major shift on Iran

Europe has realized that engaging Tehran without leverage, interlocutors or credible pathways to change is unsustainable. But it should not abandon Iranians altogether.

Expert comment

Published 5 February 2026 —

4 minute READ

Image — Iranian army cadets at in a ceremony in southern Tehran in Iran on 1 February 2026. Photo by Morteza Nikoubazl/NurPhoto via Getty Images.

Dr Aniseh Bassiri Tabrizi

Associate Fellow, Middle East and North Africa Programme

The European Union’s decision to designate Iran’s Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization last week marks the end of the EU’s long strategy of engagement with the Islamic Republic.

That strategy began in the early 1990s and endured throughout the crisis over Iran’s nuclear programme that started in late 2002. Over more than three decades, the EU sought to balance pressure with dialogue, preserving diplomatic and economic channels even at moments of acute confrontation. 

The IRGC designation therefore represents not merely a policy adjustment, but the collapse of a core assumption in European Iran policy: that sustained engagement could preserve leverage, empower Iranian interlocutors and ultimately moderate Tehran’s behaviour.

Deteriorating relations

Relations between the EU and Iran had already been eroding since 2022. Russia’s invasion of Ukraine, launched that year, marked a decisive turning point, as Iran’s provision of drones and military support to Russia placed Tehran directly at odds with a central European security priority. 

The death of Mahsa Amini in September 2022 and Tehran’s violent suppression of the ensuing protests further strained ties, exposing the widening gap between the rhetoric of engagement and realities on the ground in Iran. 

The failure to revive the nuclear agreement in mid-2023 due to Iran’s rejection of the latest agreed draft made engagement more challenging and removed the last structured framework for cooperation. The triggering of UN snapback sanctions in September 2025, which was led by the E3 (France, Germany and the UK), angered Iran, entrenching mutual mistrust. 

Still, until early 2026, few would have expected EU–Iran relations to deteriorate further, let alone reach the point of the IRGC being listed. The move has been debated for years in European capitals, particularly after the US designated the IRGC as a Foreign Terrorist Organization in 2019, and Canada followed suit in 2024. 

However, the EU had hesitated until now. Some within Europe saw the listing of the IRGC as a step that would effectively criminalize engagement with large parts of the Iranian state. They also feared retaliation against dual nationals, further escalation in theatres where EU forces operate and the closure of diplomatic off-ramps. 

The anticipated effect of designating the IRGC was never behavioural change by the group itself. Instead, the aims were signalling, deterrence and normative clarity – benefits that the EU had long judged insufficient to justify the costs.

What changed?

This calculus was ultimately shifted by the scale and brutality of Iran’s domestic repression during the early-2026 uprisings. 

Mass arrests, executions, internet shutdowns, and the open use of lethal force against demonstrators erased any remaining confidence in gradual change. Unlike previous episodes, the violence could not plausibly be attributed to rogue commanders or security excesses. It reflected a system-wide choice. Security institutions, clerical authorities, and political officials – including figures previously portrayed as reformist or pragmatic – aligned behind the crackdown and publicly framed repression as necessary.

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For European policymakers, this alignment destroyed the remaining logic of engagement. Europe found itself with no remaining credible interlocutors to engage with, nor any meaningful distinction between coercive and diplomatic power centres. Refraining from the designation therefore risked legitimizing violence, undermining Europe’s credibility and exposing the EU to accusations of moral complicity. The reputational cost became too high.

The decision to designate the IRGC came after Italy, Spain and France decided to support the measure, having reportedly previously been hesitant. Announcing the decision, the EU’s foreign affairs chief Kaja Kallas attributed the move to the crackdown on protesters in Iran, saying that ‘repression cannot go unanswered.’ The US welcomed the move, while Tehran described it as a ‘major strategic mistake.’

Impact

From an operational standpoint, the designation is unlikely to dramatically alter Iran-related business in practice, though it materially raises compliance stakes. Any European company with dealings linked to Iran already faces high sanctions risks and many will already have significant due diligence checks in place. 

However, the designation means that companies will need to ensure they check for Iranian counterparties have ownership, control or facilitation links to IRGC-affiliated networks. Enforcement agencies are likely to scrutinize Iran-linked transactions more closely, increasing legal and reputational risk for businesses even where activity is technically permissible. 

By designating the IRGC, the EU also creates another legal tool to impose secondary sanctions against businesses and individuals in third countries with ties to the IRGC. The risk for secondary sanctions will therefore also impact non-EU companies with ties to Iran.  

Europe sidelined?

Politically, the most immediate consequence is the near-total sidelining of the EU from shaping Iran policy.  This is already clear in the US-Iran talks currently scheduled for Friday. A range of countries have been reported as among the potential participants, but none of them are European. 

Europe looks set to lose what little influence it retained as a bridge between Tehran and Washington at precisely the moment when decisive choices will be made over Iran’s future. Whether president Trump will decide to pursue negotiations or escalate militarily, Europe will lack the leverage to shape outcomes. 

Article second half

Unlike the US, Europe cannot coerce or offer immediate economic relief, nor can it offer security guarantees. And unlike its own past role, it can no longer facilitate trust or communication.

The result is therefore a posture of principled distance paired with strategic dependence on US choices. This will be the case for a long time. Once enacted, the designation will be difficult to reverse. Terror listings are legally and politically ‘sticky,’ requiring significant behavioural change or systemic transformation to justify removal. 

The path forward

In this context, the most realistic path forward for the EU is not to seek influence it no longer possesses. Instead, it should prepare for the potential scenarios it cannot control, whether a US military strike or a deal in which Europe is a bystander. This involves contingency planning for military escalation, energy market disruption, and regional spillover. It also includes strengthening maritime and border preparedness, and coordinating internally on migration and humanitarian response. 

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Maintaining a diplomatic and analytical presence on the ground in Iran remains essential, not necessarily as a channel for negotiation, but as a means of understanding internal dynamics, monitoring repression and preserving limited crisis-communication options.

Crucially, the EU should also focus on protecting Iranian citizens where possible, safeguarding humanitarian trade, supporting civil society, and ensuring that pressure on the regime does not translate into indiscriminate harm to the population. The designation of the IRGC should not become a pretext for abandoning Iranians altogether.

Ultimately, the EU’s move reflects a difficult conclusion in European capitals: engagement without leverage, interlocutors or credible pathways to change is no longer sustainable. The challenge now is to manage the consequences of disengagement.