By Alireza JafarzadehForeign Affairs Analyst

Bowing to the definitive rulings of seven European high courts and finally adhering to Europe's long-held claim to the rule of law, on Monday January 26, 2009, the 27-member European Union removed Iran's main opposition, the People's Mojahedin of Iran (PMOI/MEK), from its terror blacklist. The EU decision sent shockwaves through Tehran's leadership, which had invested much of its diplomatic and economic leverage over the past seven years in preventing the de-listing of the PMOI. It marked a timely and significant EU policy-correction toward the ayatollahs' regime. And most importantly, it can serve as an impetus for the ongoing Iran policy review within President Obama's administration.

The EU did much harm to the international campaign against terrorism and extremism when it turned the terror blacklist into a political plaything.

Agence France Presse reported in October 2004 that the EU's so-called big three, France, Britain, and Germany, had promised Tehran that they would continue to regard the PMOI "as a terrorist organization" if Tehran agreed to continue its nuclear talks with the EU-3. Well, the EU continued blacklisting the PMOI, while Tehran pushed forward its nuclear drive at full speed, using the talks as diplomatic cover. According to The Wall Street Journal of May 8, 2008:

"Iranian officials have urged suppression of the MEK [PMOI] in negotiations with Western governments over Tehran's nuclear program and other issues."

It is now clear, the EU had pursued a counter-productive policy by losing the only leverage it had over Tehran by blacklisting Iran's main opposition, and as a result, restrained much of the opposition's potential--to the benefit of the Iranian regime. Therefore it was the ruling clerics in Tehran that obtained leverage over the EU by getting their main opposition blacklisted by the Europeans. In the absence of any leverage over Tehran, with very concession provided by the EU, Tehran got greedier and accelerated its nuclear weapons program.

It should, therefore, come as no surprise that European courts could not find any evidence implicating the PMOI in terrorism. It was never about terrorism. On December 4, 2008, the European Court of First Instance annulled for the third time the EU's decision to blacklist the group. The decision was annulled both on procedural grounds and on the basis of the EU's failure to substantiate its allegations of terrorism against Iran's largest and most organized opposition.

Fast forward to January 26, 2009: the foreign ministers of the EU member states gathering in Brussels finally removed the PMOI from their terror list. When news of the decision to unshackle its arch-enemy in Europe leaked the week before, Tehran pulled out all diplomatic, political and economic stops, trying to avoid the inevitable.

A senior national security figure in Iran's Parliament had warned about the domino effect when the UK ended its blacklisting of the group in 2008. Now Iran's Supreme National Security Council (SNSC) ordered its Foreign Ministry and Ministry of Intelligence and Security (MOIS) to do whatever they could to block the move and force the EU to defy the high court.,

When enticement failed, Tehran officials threatened their interlocutors in diplomatic encounters in Tehran and European capitals with serious economic and political consequences. Tehran also exerted maximum pressure on European companies involved in lucrative contracts with Iran, to in turn press their capitals "to be cautious in removing the PMOI from the terrorist list."

Reporting back to SNSC in mid-January (according to the information obtained by the sources of the opposition's Parliament-in-exile, the National Council of Resistance of Iran), Iran's Foreign Ministry revealed its tactics. The report reads in part, "To prevent removal of the group from the EU terrorist list, all representative offices of the Islamic Republic in European countries are currently active, providing documents to the EU countries to prove that the PMOI is terrorist. France has pledged to avert removal of the PMOI from the terror list."

The report adds, "Reports prepared by the intelligence services in some European countries which indicate that the PMOI is a terrorist organization are based on information we have put together in Tehran and supplied to those countries."

The ayatollahs' regime is caught up in political and economic turmoil which, in anticipation of its upcoming presidential elections, will only get worse. The latest domestic crackdown, widespread student protests, and escalating executions--many in public--all point to a regime in a downward spiral. In these circumstances, lifting the terrorist designation from a movement with proven organizational prowess and a vast support network inside the country poses an existential threat to the regime. Hence their frantic reaction to the EU's decision.

And here lies what could be the key component of a new Iran policy. Now that it has become common knowledge that the PMOI's terror designation, both in Europe and the U.S., was but a failed political ploy to cajole the ayatollahs into "good behavior," it is time for Washington to also lift this unjust designation. Nothing would more signify genuine change in the U.S.-Iran policy.

Alireza Jafarzadeh is the author of "The Iran Threat: President Ahmadinejad and the Coming Nuclear Crisis" (Palgrave: February 2008).

Jafarzadeh has revealed Iran's terrorist network in Iraq and its terror training camps since 2003. He first disclosed the existence of the Natanz uranium enrichment facility and the Arak heavy water facility in August 2002.

Until August 2003, Jafarzadeh acted for a dozen years as the chief congressional liaison and media spokesman for the U.S. representative office of Iran's parliament in exile, the National Council of Resistance of Iran, of which People's Mojahedin of Iran is the largest member organization.

Alireza Jafarzadeh, the deputy director of the Washington office of the National Council of Resistance of Iran, is credited with exposing Iranian nuclear sites in Natanz and Arak in 2002, triggering International Atomic Energy Agency inspections. He is the author of "The Iran Threat" (Palgrave MacMillan: 2008). His email is Jafarzadeh@ncrius.org.