What the New Houthi Terrorist Designation Means for Yemen

When the U.S. returned Yemen’s Houthi movement to its list of Foreign Terrorist Organizations on Mar. 4, the decision not only reversed the Biden Administration policy—it also reignited debates over U.S. strategy in Yemen’s decade-long civil war and its humanitarian fallout. The Houthis have attacked Red Sea shipping and launched missiles toward both Israel and Saudi Arabia. But critics argue the terrorist designation—which carries penalties for doing business with the faction—could exacerbate an already dire situation where millions of civilians rely on aid to survive.

“The United States will not tolerate any country engaging with terrorist organizations like the Houthis in the name of practicing legitimate international business,” Secretary of State Marco Rubio said in the statement announcing the designation.

Iran supplies the Houthis with drones, missiles, and training, enabling the group to target Saudi cities, Israel, and international shipping lanes. With Hezbollah and Hamas diminished, and the Bashar regime no longer controlling Syria, the Yemeni militia has grown more prominent in Iran’s “axis of resistance.” Both the U.S. and Israel have launched bombing raids on the Houthis, including an October U.S.srike by B-2 stealth bombers on underground weapons caches.

But restoring the “terrorist” designation may only have a tangential impact on the Houthis, says Nader Hashemi, associate professor of Middle East and Islamic politics at Georgetown University. “The sanctions that go with it don't really weaken these countries,” he says. “They're mostly, I think, grandstanding and an opportunity for, in this case, the Trump administration to try and distinguish himself from Biden and to present himself as really standing for himself against America's enemies.”

Other experts agreed the move is more about domestic political posturing than achieving change on the ground. Some said it may actually heighten the threat to shipping.

“If the Houthis continue to engage with shipping attacks, now that there’s a terrorist designation, it contributes to greater tensions in the Middle East,” Hashemi says. “In this sense, there could be greater economic cost if ships traveling through the Red Sea are fired on, forcing them to choose different routes or if there are now greater insurance rates that have to be charged because of the threat of the attack. The consumers would have to pay the price for this added expense if businesses are charging more to send their ships through the Middle East.”

“When they're pressurized, [the Houthis] generally responds militarily,” says April Longley Alley, Senior Expert for the Gulf and Yemen at United States Institute of Peace. “They’ve been threatening for a while to retaliate, either inside of Yemen or outside.”

Who are the Houthis?

The Zaydi Shia Islamic religious ideology of the Houthis allows for recasting violence as resistance. The group’s founder, Hussein al-Houthi, framed the movement as a revival of Zaydi identity against perceived marginalization by Yemen’s Sunni-majority governments and growing Salafi-Wahhabi influences. “It’s a hodgepodge of sorts,” says Bader Mousa Al-Saif, assistant professor of history at Kuwait University and a fellow at the Arab Gulf States Institute in Washington. “It’s messianic, it’s eclectic, it gives full subservience to the descendants of the Prophet.”

Under the current leadership of Hussein’s brother, Abdul-Malik al-Houthi, the group has weaponized this ideology, portraying its fight as a divine struggle against foreign “occupiers” and neighbors, notably Saudi Arabia, which invaded in 1934.

“These [radical ideologies] are the things that motivate action and motivate violence,” Al-Saif stresses. “Policymakers are treating symptoms, they’re not treating the origins of the issue. If you go out and you try to block ships or you try to safeguard ships, you're not dealing with the issue on the ground. [The Houthis] are on the ground in Yemen. They've been trying to close up on their own population. They're not allowing people to express themselves… so we need to listen to Yemeni civilians.”

Yemen has a long history of political division—for much of the 20th Century it was two countries, North Yemen and South Yemen. The current war dates from divisions that surfaced during the Arab Spring that were encouraged by other nations, including Saudi Arabia and the United Arab Emirates, which involved their own militaries. Those rivalries have hamstrung UN-led efforts at political settlements, and the Houthis have detained dozens of UN staff since 2021. The UN notably suspended operations in the Houthi-controlled Saada region after 8 more staff members were forcibly detained. In February, the U.N. World Food Programme announced that one of their aid staff died while in detention in Houthi-controlled northern Yemen.

“So many Yemeni staff have been kidnapped, tortured, for no reason but their alliance with the United States. And there’s something really sinister about that,” says Fatima Abo Alasrar, Senior Policy Analyst for the Washington Center for Yemeni Studies. “It is a movement that stands as a threat to other religions, to other countries, and to the United States primarily.”

What is Yemen's humanitarian situation?

An estimated 19.5 million people now need humanitarian assistance and protection services – 1.3 million more people than last year. Yemen is one of the poorest countries in the Middle East and North Africa, and among the worst humanitarian crises in the world. In 2024, USAID provided Yemen with roughly $620 million in total aid. Trump has since shuttered the agency. And though Secretary Rubio issued a waiver for life-saving humanitarian aid, aid groups in Yemen claim operations remain suspended.

Advocates warn that being listed as a terrorist state by the U.S. may stifle humanitarian aid from other sources, which 80 percent of the population are critically in need of. “Innocent people are going to suffer,” says Hashemi. “Any humanitarian organization that wants to pursue exporter contracts or engage in bank transfers in order to facilitate aid will now be blocked because of this terrorist designation.”

A report from the Embassy of the United Arab Emirates, which went to war against the Houthis, has stated that “returning the Houthis to the terror list will not impede critical aid flows.” It cites a 2021 document from the Houthi’s previous designation to highlight ways to authorize humanitarian aid relief, such as licenses and good faith exceptions. Experts say the reality is less clear.

“While there have been measures put into place to prevent the worst impacts on the humanitarian space, it really depends on how the private sector and the international banking system interprets the cut-outs that are there,” says Alley, noting that the private sector in Yemen is strikingly fragile. General licenses make it so that transactions are authorized that otherwise would not be. They act as a safeguard intended to balance U.S. counterterrorism goals with the urgent need to prevent famine and protect the livelihoods of millions of Yemenis.

“The real risk to the Yemeni economy and to Yemeni livelihood is this issue of over-compliance,” Alley says. Some parties may avoid Yemen altogether out of fear of running afoul of the U.S. Treasury Department, which enforces the sanction. “This has a knock-down effect throughout the country, so we have to see how it plays out.”

“We shouldn't limit ourselves to such an option,” Al-Saif says. “We should have an integrated toolkit that looks at different aspects without having the average Yemeni impacted.”