The Bush administration is taking the extraordinary -- and unsettling -- step of naming a sanctioned armed force of a sovereign country a terrorist group. The designation is going to the Ahmadinejad-allied Iranian Revolutionary Guard, which receives a host of independent funding from outside sources, and which can now be targeted financially by the Bush administration. In other words, this is an intermediary -- and inflammatory -- step towards much tougher, more intrusive sanctions meant to target a key element of the Iranian state. Joe Cirincione, an expert on nuclear proliferation, comments:
It would tie an end to Iran's nuclear program to an end to its support of allies in Hezbollah and Hamas. The only way you could get a nuclear deal is as part of a grand bargain, which at this point is completely out of reach.[...]
Sanctions can serve as a prod, but they have very rarely forced a country to capitulate or collapse. All of us want to back Iran into a corner, but we want to give them a way out, too. [The designation] will convince many in Iran's elite that there's no point in talking with us and that the only thing that will satisfy us is regime change.
I don't know how much likelier this makes war, but it certainly doesn't render it less likely, and it's hard to imagine the causal chain wherein the angered Iranian Revolutionary Guard doesn't create a self-fulfilling prophecy and begin increasing strikes at American interests within Iraq, if they haven't already.