After the fall of Saddam Hussein there have been negotiations between Iran and Iraq to dismantle Camp Ashraf in north of Baghad, where the MKO is stationed. But these negotiations became more serious after the American troops gave control of the camp to the Iraqis. Iran hopes that some of the low-level members will return voluntarily to Iran and will be rehabilitated, while the top cadres will be sent to Iran by Iraq so that they will be put on trial for their crimes against the Iranian people.
I believe this is a big mistake. The MKO is the cult of Massoud and Maryam Rajavi. Their followers have been brainwashed for decades to be loyal to the Rajavis, then God and Islam. Although after moving to Iraq they added some nationalistic fervor to their ideology and slogans and adapted the Iranian flag with lion and sun, in practice they were not loyal to their home country.
Their main political agenda has been to get to the power by any means and methods. They have shown this through their political orientation and actions over many decades: first by selling secret national security files to the Russians at the beginning of the Islamic revolution, then going to Iraq and fighting against Iran, before siding with Saddam and fighting against the Kurds. At the end of the occupation of Iraq by the US forces, they were caught in the same trap they had set for themselves.
If they are expelled, these middle-aged men and women, who have not been doing anything but worshiping Maryam and Massoud five times a day for the last few years, will have to go mostly to European or Arab countries. Some Arab intelligence organizations from Saudi Arabia and Jordan and also the Israelis are already doing on site job interviews with them to use their talents against Iran. Those who go to Europe will definitely have to lay down their arms and organize into a political organization.
European Union decision to take them off the list of terrorist organizations is just for this purpose. They will again be used as a hired gun against Iran for political gains by the Europeans. They could easily be organized into a paramilitary style fascist/Nazi political groups and extend their hands into Iran for political agitation or whatever their host countries want them to do. Some of them are already helping Jundollah in Baluchistan and Bejak in Kurdistan.
The government of Iran should negotiate with Iraq to keep them there and not expel them; as this keeps them busy with what they have been doing since US invasion of Iraq. If they set foot in Europe, they will get better exposure from the Western media and can use it as effectively as did Ayatollah Khomeini when he moved to Paris. In Iraq they will be isolated and insulated for the next twenty or thirty years and thus the last chapter of this organization will end peacefully.
