Country code domains are decided by international agreement on two character abbreviations per country, and IANA needs to abide by that.
For example, can you imagine IANA caught In the middle of whether ‘.cn’ should be owned by China or Taiwan? What a disaster that would be. Their only sustainable approach is to stay out of it, and just follow what the UN says
I generally agree, but .io stands for “indian ocean”, which isn’t a country.
“Territories of the Indian Ocean” which had been internationally recognized as a political entity and is no more.
An important consideration is what if something becomes internationally recognized with that two character abbreviation? How is it IANA’s business to disagree with the world?