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TEHRAN. – President Hassan Rouhani has defended the Islamic Revolutionary Guard Corps (IRGC) as protectors of Iran and said that theUS decision to label the Iranian elite force a “terrorist group” was a mistake.

“The Guards have sacrificed their lives to protect our people, our (1979 Islamic) revolution … Today America that holds a grudge against the Guards, blacklists the Guards,” Rouhani said in a speech broadcast live on state television.

In an unprecedented step, US President Donald Trump designated the IRGC a “foreign terrorist organisation” on Monday.

Tehran took retaliatory action by naming the US Central Command (CENTCOM) as a “terrorist organisation” and the US government as a “state sponsor of terrorism”.

Rouhani called the US decision a mistake and other Iranian officials have warned that it will endanger American interests in the region, where Iran is involved in proxy wars from Syria to Lebanon.

“This mistake will unite Iranians and the Guards will grow more popular in Iran … America has used terrorists as a tool in the region while the Guards have fought against them from Iraq to Syria,” Rouhani said.

Iran’s Foreign Minister Javad Zarif said the move was a “misguided election-eve gift to (Israeli Prime Minister Benjamin) Netanyahu”. Israelis are voting to decide if Netanyahu can win a record fifth term in office.

If the US continues to pressure Tehran, Rouhani said, Iran’s nuclear agency will produce advanced centrifuges – used to enrich uranium.

Relations between Tehran and Washington took a turn for the worse in May last year when Trump pulled out of a 2015 nuclear deal between Iran and six world powers and reimposed sanctions on the country.

Iran has threatened to exit the deal and to resume its suspended nuclear work if other signatories of the pact fail to protect Tehran’s interest.

“I am telling you (American leaders), if you pressure us, we will mass produce IR8 advanced centrifuges,” Rouhani said in the speech marking Iran’s National Nuclear Day.

IRGC commanders have repeatedly said that US bases in the Middle East and US aircraft carriers in the Gulf are within range of Iranian missiles.

Al Jazeera’s Zein Basravi said the implications of labelling the IRGC a “terrorist organisation” could have far-reaching effects, putting “more pressure on remaining international business links that Iran still has”.

“Iranians will tell you the latest move to isolate them and their country goes too far,” Basravi said.

“For many Iranians, being placed in the same category as groups like al-Qaeda or ISIL will be seen as a major escalation,” he said, adding that Iranians are now more likely to support a “more aggressive” approach by their government when dealing with the US.

The US has already blacklisted dozens of entities and people for affiliations with the IRGC, but not the organisation as a whole.

Trump on Monday confirmed earlier reports that the US was planning the designation, saying it will continue to increase financial pressure and raise the costs on Iran “for its support of terrorist activity”.

Tehran has in the past threatened to disrupt oil shipments through the Strait of Hormuz if the US tries to strangle Tehran’s economy by halting its oil exports.

Meanwhile, Iran’s regional rival, Saudi Arabia, welcomed the US decision on Tuesday.

Saudi Arabia, led by a Sunni Muslim royal family, has accused Iran of interfering in its and other Middle Eastern countries’ internal affairs.

Iran and Saudi Arabia have been fighting proxy wars for years, backing opposing sides in conflicts in Syria and Yemen.

“The US decision translates the kingdom’s repeated demands to the international community of the necessity of confronting terrorism supported by Iran,” the official SPA news agency said, citing a foreign ministry source.

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

It also may complicate diplomacy. Without exclusions or waivers to the designation, US troops and diplomats could be barred from contact with Iraqi or Lebanese authorities who interact with IRGC officials or surrogates. – Al Jazeera