ABC News reported some startling news today: the Department of Justice has charged two men working for "factions of the Iranian government"--specifically a branch of the Iranian Islamic Revolutionary Guard Corps called the the Quds Force--of plotting to assassinate Saudi Arabia's U.S. ambassador, Adel Al-Jubeir, and bomb Saudi and Israeli embassies in Washington, D.C., and Buenos Aires (you can find the full criminal complaint here). The development comes not long after the head of Iran's navy threatened to deploy military ships near the United States' Atlantic coast.

Iranian officials are denying today's reports and Iranian state media, predictably, is discounting the report. Their first report leads: "Islamic Republic News Agency was informed a few minutes ago by a source in the United States that the US Government is launching a new propaganda campaign against the Islamic Republic of Iran." Press TV quotes an aide to President Mahmoud Ahmadinejad as saying that the U.S. accusations represent a "'prefabricated scenario.'" The agency implies that the U.S. is seeking to "distract public attention" from "growing popular protests across the U.S" (Iranian news outlets have been gleefully covering Occupy Wall Street). 

U.S. Attorney General Eric Holder, for his part, has declared that the plan was "conceived, sponsored and directed from Iran" in "flagrant" violation of U.S. and international law, adding that the White House will be huddling with federal agencies before announcing "further action" against Iran within hours. Beyond the outrage and tough talk, here's what we're seeing about how the foiled terror plot will substantively impact U.S.-Iranian relations:

  • More sanctions: Secretary of State Hillary Rodham Clinton told the AP that the Treasury Department will swiftly impose sanctions on more Iranian officials. Indeed, Reuters is reporting that Treasury has already slapped sanctions on five men, including "four senior members of an elite Iranian security force," whom they say played a role in the foiled scheme. Before you marvel at the swift response, we should note that President Obama was first briefed on the alleged plot in June. U.S. officials may therefore have had some time to determine how they would retaliate.
  • Security Council action: A U.S. official tells CNN that the administration plans to raise the plot with the U.N. Security Council, though it's unclear what practical consequences that would have.
  • Further diplomatic isolation: A White House official informs CNN that the U.S. is going to work with its international partners to isolate the Iranian government, specifically the Islamic Revolutionary Guard and the Quds force. But, of course, the U.S. is already isolating these groups. As the Financial Times explains, "the Quds force is suspected of being behind attacks against US forces in Iraq and was labelled a 'specially designated global terrorist organisation' by the US in 2007 for helping the Taliban and other terrorist organisations." The Islamic Revolutionary Guard has been sanctioned for its role in overseeing Iran's nuclear program.

In other words, don't expect military action. But do expect tougher diplomatic action and U.S.-Iranian relations hitting a new low, if that were possible (remember all that talk of engagement when Obama first took office?). A defense official tells CNN that the U.S. has not changed its military posture in reaction to news and that the incident is "much more of a law-enforcement matter." But Hot Air's Ed Morrissey isn't happy with that answer, noting that "we're presently using drones in Pakistan and Yemen against al-Qaeda terrorist networks for plotting similar attacks." He adds, "If we're charging an official of the Iranian government with complicity or worse in this plot, then it ceases to be a law enforcement issue and becomes a military and political issue instead. ... If we're not willing to respond in kind, we then send a signal to hostile nation-states around the world that attacks on the US are low-risk, high-reward affairs--and we'd better get ready for an avalanche of them."

The plot is also likely to torpedo already bitter relations between Iran and Saudi Arabia. (Saudi Arabia, a monarchy with a predominantly Sunni Muslim population, has been locked in a battle with Shiite-led Iran for regional hegemony ever since the 1979 Islamic Revolution.) Abdullah Alshamri, a Saudi official in Riyadh, told The New York Times that the revelation today would send Iranian-Saudi relations to "their lowest point yet," adding, "If we keep our diplomatic ties with the Iranians, they will think we are weak and they will keep trying to attack us."