Donald Trump’s designation of Iran’s Revolutionary Guards (IRGC) as a terrorist organisation will have far-reaching consequences, and is a highly significant step in the escalation of tensions with Tehran.

It is the first time the US has labelled another sovereign state’s armed forces as terrorists, and the move will renew charges that this is yet another step in Washington’s attempt to instigate regime change in Iran.

The most immediate effects of Trump’s decision are that it enables the US to impose further sanctions. At the same time it will make it even more difficult for the countries trying to save the nuclear deal with Iran, which Trump is striving to sabotage with a new raft of punitive measures – making it more difficult for banks and businesses to trade with Iran.

Senior CIA and Pentagon officials had advised against the terrorist designation, stressing it will be used by hardliners to justify operations against Americans and their allies, especially those working undercover.

The US Department of State warned the step would cause problems for relations with allies – particularly Iraq, where the IRGC has ties to powerful militias, and Lebanon where it has ties with Hezbollah, which is part of the government there.

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But this US president, a Vietnam draft dodger who routinely traduces military heroes and blamed the supposed “deep state” for investigations into whether he was the Muscovian candidate in the US presidential elections, is now very much in confrontation with his security and diplomatic establishment.

The decision about the IRGC came in the same week Trump started a systematic purge of internal security, removing the director of the Secret Service, Randolph Alles, and forcing the resignation of homeland security secretary Kirstjen Nielsen – with other senior officials, it is believed, due to follow.

Trump’s national security adviser, John Bolton, and Mike Pompeo, the secretary of state, egged on by Saudi Arabia and Israel, have been pressing for action against the Revolutionary Guards. Both are hawks on Iran, and there is particular suspicion in Tehran of Bolton.

At the recent meeting of the annual Munich Security Conference, the Iranian foreign minister, Mohammad Javad Zarif, wanted to point out that Bolton had told an Iranian exile group – the Mujahedin Khalq (MEK), once designated as terrorists in the US and Europe – the Trump administration should fully back their goal of immediate regime change and recognise the group as a viable alternative.

“John Bolton is now angry because he said he would celebrate with MEK in Tehran in 2019 and that is not going to happen,” said Zarif.

But there is another issue with this president, as it continues to be in the “Russiagate” inquiries – his business affairs.

Two years ago The New Yorker magazine published an account of Trump Tower Baku, an edifice which never actually opened to the public and, according to the report, appeared “to be a corrupt operation engineered by oligarchs tied to Iran’s Revolutionary Guard”.

Ivanka Trump, the president’s daughter, visited the site in 2014 and offered advice about various aspects of the project.

The Trump organisation, say legal documents, signed multiple contracts to construct the tower with the Mammadov family, whose head Ziya Mammadov, then the transport minister of Azerbaijan, was described in US diplomatic messages as “notoriously corrupt even for Azerbaijan” (according to non-profit group Transparency International, the country is one of the most corrupt nations on Earth) .

The project came before the Iran nuclear deal, at a time when international financial institutions were wary of dealing with Iranian institutions. The aim of the Baku Tower project, The New Yorker report noted, was to “launder money and do other biddings of the central organisation”.

The Mammadovs had economic links to the Darvishi family, three of whose members were directly associated with the IRGC. Ziya Mammadov had awarded a number of contracts on the project to Azarpassilo, an Iranian construction company run by the Darvishis.

The IRGC is heavily involved in commercial sectors of Iran, owning swathes of factories and businesses – as is the case with the military in other countries including Pakistan and Egypt.

This is a matter of some controversy inside Iran. One of the reasons for the unrest which swept the country last year was the leaking of the national budget which revealed that, while ordinary people were suffering economic hardship due to new American sanctions, some conservative religious institutions and security bodies like the IRGC remained unaffected and continued to do well.

The budget was almost certainly leaked by people in the reformist administration of president Hassan Rouhani. It is the reformers who are being undermined by Trump’s sabotage of the nuclear deal, and will continue to be by the IRGC designation.

That organisation will claim to be patriotic champions, keep on getting its money, and it will be at the detriment of the long-suffering Iranian people.