Re: The recent U.S. consideration to designate the 125,000 person strong Revolutionary Guard of Iran as a “specially designated global terrorist”.

Yes, the Law of Unintended Consequences does indeed apply. But here's a short summary of the Law of Unintended Consequences:
Unintended consequences can be classed into roughly three types:

1) a positive unexpected benefit, usually referred to as serendipity or a windfall
2) a potential source of problems, according to Murphy's law used in Systems engineering
3) a negative or a perverse effect, which is the opposite result of what is intended
Link is http://en.wikipedia.org/wiki/Unintended_consequence

Now, let's look at why this designation of the IRGC is happening in the first place. The IRGC started to "acquire" existing business contracts which were previously held by Iranian non-IRGC business interest (looks like starting in earnest in 2003). Many of these existing contracts were in partnership with other, non-Iranian firms, and were located in the Engineering, Construction, and PetroChem sectors of the Iranian economy. The outside partners (usually non-Iranian) were given little, if any choice in the selection of their new partners.

Both the WSJ and the FT among others have been profiling these types of occurrences, going all the way back well into 2006. This trend of IRGC business contract "takeovers" actually can be traced back all the way into 2003.

These IRGC business contract "takeovers" also usually preceded several events that resulted in attempts/actions by Iranian representatives to unilaterally take control of project assets and equipment, unilateral renegotiation of agreements to provide for IRGC control, and even termination of agreements which they did not find to be favorable to their interests.

In both 2006, and now 2007, the IRGC has "acquired" control of some very large pre-existing business agreements where the IRGC has some very potentially lucrative, yet highly complex agreements. With some of these "takeovers", other powerful Iranian, non-IRGC business interests were pushed aside in favor of the IRGC. There appears to be at least some covert dissension among the losing parties over their rather abrupt removal from the business agreements (understandably not too happy).

US Treasury obviously feels that this is a move to escape sanctions, and they see that the IRGC has made a rather substantial number of financial commitments, which from Treasury's viewpoint, are an international financial pressure point that can be exploited, and can be extremely effective.

Look at this from Treasury's viewpoint: IRGC has made themselves into a very large player, and consequently a target. The types of business agreements the IRGC has taken over require external financing equipment above and beyond what is available within Iran, and designation as a “specially designated global terrorist” makes acquiring either, much less both extraordinarily difficult.

Plus (to be blunt about it), this really sticks it to the IRGC, certainly has the potential to make them look like unreliable business partners, and creates potential allies among the non-IRGC business partners who were strong-armed out of these business agreements.

From Treasury's standpoint, it's hard to see a down side. Plus, don't discount the effect of doing this in the political marketplace. The reality is that if you don't do something like this, the pressure is just going to build to take actions against Iran in other venues. And these actions would probably tend to be of a more "direct nature".

Truth of the matter is that the IRGC has made themselves out to be a very lucrative target for such economic controls. A pressure point to be taken advantage of.

As to the law of unintended consequences, I can see (1) happening in the sense that there could easily be elements within Iran that won't be at all unhappy to see these impacts upon the IRGC. Such actions by Treasury also gives unwilling non-Iranian partners a reason to avoid dealing with the IRGC.

I can see (2) happening just because those effects are going to happen regardless of these actions occurring, or not occurring.

Am hard pressed to see how (3) can occur.

My .02