Washington ( CNN ) -- Calling the situation `` untenable , '' a senior State Department official gave details Thursday of a proposed `` humanitarian '' solution to the standoff over Iraq 's Camp Ashraf , a settlement of Iranian dissidents who say they will be killed if they are returned to Iran . Under the U.S. plan , the approximately 3,400 residents of Ashraf would be temporarily relocated within Iraq , farther from the border with Iran , the official said . The camp houses followers and members of the Mojahedin-e Khalq Organization ( MEK ) . The United States considers it to be a terrorist organization . The MEK has opposed the Iranian government for decades , and the group was sheltered in that camp and other locations in Iraq during the era of Iraqi leader Saddam Hussein . The group was used by Hussein as part of his security forces and has a tense relationship with many Iraqis , especially Shias and Kurds . The relocation would be temporary , the official said , with final settlement of the inhabitants in other countries . That would not include the United States , the official said , since U.S. law bars anyone associated with a terrorist organization from settling there . The new location would be `` chosen and maintained and operated '' by Iraq and appropriate humanitarian conditions would have to be maintained in this camp , the official said . `` We will work with the government of Iraq , Ashraf residents and international partners to guarantee the safety of Ashraf residents if they agree to this move , '' the official said , `` if all sides agree to this plan . '' Iraq has ordered the camp be closed by the end of the year and wants the residents to leave the country . The residents are refusing to budge , and do not recognize Iraqi sovereignty over their camp . The U.S. plan has been presented to the Iraqi government , the official said , and it is `` reviewing its position . '' `` We hope the Ashraf leaders will react positively to this plan , as we hope the government of Iraq will react positively to this plan , largely because we see no other solution for a group that has no status , '' the State Department official said . The United States has discussed its proposal with the international community , this official said . In April , 34 people were killed and more than 300 others were wounded in a confrontation between Iraqi security forces and people in Camp Ashraf . The exiles said Iraqi security forces invaded their camp , but security forces said their members were attacked by the group . The violence , the official said , highlights the vulnerability of the camp 's residents , who lack any legal status in Iraq but have refused to request refugee status . `` Given the history of mutual provocation we are deeply concerned about the possibility of future violence , '' the official said . The U.S. would work to guarantee the safety of all sides , the official said , but this would not involve American troops . `` There 's no easy solution to this matter , '' the official said . `` We believe this is the best way forward ... our bottom line is that both sides need to step back from violence and the violence that has characterized the relationship , and we want to avoid another tragedy at Ashraf . '' Iraq under Saddam and Iran fought a bloody war in the 1980s . Since the U.S.-led invasion in 2003 , relations between Iran and Iraq have improved . A majority of Iraq 's new government is composed of Shiite Muslims , the majority religion in Iraq , and official attitudes toward the MEK changed . The camp has been the subject of debate in Iraq since American forces relinquished control of it in 2009 . Iran has long urged Iraq to get rid of Camp Ashraf and the opposition group there , and Iraq 's failure to do so is a point of tension between the two countries . Tehran considers the MEK to be a terrorist outfit . The European Union does not . Another State Department official said the department is reviewing the Foreign Terrorist Organization designation of the MEK , with a final decision to be made by Secretary of State Hillary Clinton on whether to maintain or rescind it . The MEK is providing information for the review , the official told CNN . CNN 's Mohammed Tawfeeq contributed to this report .
Iraq wants to attack camp of Iranian army . Deadly clashes at Camp David broke out last month . The United States is proposing temporary sanctions . U.S. currently considers group to be terrorist organization .