Iranian Revolutionary Guard members arrive for a ceremony celebrating the 40th anniversary of the Islamic Revolution in Tehran, Iran. US President Donald Trump's administration is preparing to designate the guard as a "foreign terrorist organisation." File photo: AP Photo/Vahid Salemi.

WASHINGTON — President Donald Trump announced Monday that the U.S. is designating Iran's Revolutionary Guard a "foreign terrorist organisation", in an effort to increase pressure on the country that could have significant diplomatic implications in the Middle East.

It is the first time that the U.S. has designated a part of another government as a terrorist organisation.

The designation imposes sanctions that include freezes on assets the Islamic Revolutionary Guard Corps may have in U.S. jurisdictions and a ban on Americans doing business with it.

"This unprecedented step, led by the Department of State, recognises the reality that Iran is not only a State Sponsor of Terrorism, but that the IRGC actively participates in, finances, and promotes terrorism as a tool of statecraft," Trump said in a statement.

Iran has threatened to retaliate for the decision.

The IRGC is a paramilitary organisation formed in the wake of Iran's 1979 Islamic Revolution to defend its clerically overseen government. 

The force answers only to Iran's supreme leader, operates independently of the regular military and has vast economic interests across the country.

The designation allows the U.S. to deny entry to people found to have provided the guard with material support or prosecute them for sanctions violations. That could include European and Asian companies and businesspeople who deal with the guard's many affiliates.

It will also complicate diplomacy. Without exclusions or waivers to the designation, U.S. troops and diplomats could be barred from contact with Iraqi or Lebanese authorities who interact with guard officials or surrogates.

The Pentagon and U.S. intelligence agencies have raised concerns about the impact of the designation if the move does not allow contact with foreign officials who may have met with or communicated with guard personnel. Those concerns have in part dissuaded previous administrations from taking the step, which has been considered for more than a decade.

The department currently designates 60 groups, such as al-Qaida and the Islamic State and their various affiliates, Hezbollah and numerous militant Palestinian factions, as "foreign terrorist organisations." But none of them is a state-run military.

AP