Just Security: Six Reasons Why a Terrorist Designation for Yemen’s Houthis is a Bad Idea

This op-ed was originally published in Just Security.

The Trump administration is understood to be close to designating Yemen’s Houthi militia as a foreign terrorist organization (FTO). The move is part of a wider effort by the Trump administration to pressure Iran, which has provided the Houthis with arms and other support. The designation would prevent U.S. persons or organizations from almost any interaction with the Houthis, even though they control a portion of Yemen where 80 percent of the population lives. The humanitarian impact of the decision cannot be understated. Long-suffering Yemenis will pay the price for Trump’s last-ditch attempt to inflict pain on Tehran. Here are six reasons why an FTO designation on the Houthis is a bad idea.

First, the designation will interrupt the humanitarian response in Yemen. Yemen has long been the world’s worst humanitarian crisis, with roughly 80 percent of the country’s almost 30 million civilians needing some form of aid to survive. Relief efforts are already under significant strain from the continued fighting and aid interference by the parties to the conflict. Although sanctions resulting from a terrorist designation can formally exempt humanitarian aid, the processes for doing so tends to be lengthy and burdensome. The designation could also restrict the ability of humanitarians to engage with key actors like the Health Ministry or other government agencies controlled by the Houthis. NGOs will have to put aid programs on hold while they navigate these challenges.

Second, a new sanctions regime will have a “chilling effect” on aid in general.  Sanctions associated with counter-terror legislation tend to slow relief efforts, even when they explicitly exclude humanitarian activities from their scope. The complex regulatory framework and high risks associated with violating sanctions have led humanitarian actors to err on the side of caution, sometimes self-regulating beyond what is legally required. In addition, the stigma of “supporting terrorism” leads banks to adopt de-risking policies that limit their potential exposure. This has the potential to disrupt financing for aid operations (as a recent analysis explains, a 2018 GAO report “confirmed that bank ‘de-risking’ presents a substantial challenge to recipients of USAID and State Department funding”). In Syria, for example, the U.S. sanctions regime exacerbated concerns over liability to the point where banks refused to process “dollar-denominated humanitarian transactions” that are actually permitted under the law.

Third, humanitarian exemptions are unlikely to unblock critical relief and recovery efforts. In protracted crises like Yemen’s, the lines between humanitarian relief and development can blur, because rebuilding infrastructure is essential to providing humanitarian assistance. Efforts to rebuild water, sanitation and school facilities can be subjected to enhanced scrutiny. Yemen is in dire need of these programs, as its critical infrastructure has been decimated. Over 278 health facilities have been destroyed by airstrikes, and less than one-quarter of rural Yemenis have functioning public water networks. Many of these essential reconstruction efforts could be derailed by a terrorist designation. In Syria, aid workers report that U.S. authorities can take up to 3-6 months to sign off on a request to exempt “dual-use” items like IT equipment for their offices.

Fourth, the designation will erode the economy by further stifling imports. In its campaign against the Houthis, the Saudi-led coalition has relied heavily on economic warfare. Initially, this took the form of an official blockade of the country’s ports. Over time, the Saudi chokehold evolved into unofficial measures and delays that stifled Yemen’s commercial imports, devastating a country that imports 90% of food supplies, 85% of medical supplies, and most of its fuel. By imposing additional costs and processes on importers, an FTO designation could further weaken what remains of the country’s economy.

Fifth, a terrorist designation is likely to torpedo diplomacy.  The United States has played an important diplomatic role at key moments in Yemen’s peace talks, including at comprehensive negotiations in 2016, avoiding a catastrophic UAE-led attack on Hudaydah port in 2018, and in restarting back-channel Saudi-Houthis talks after Saudi oil facilities were bombed in 2019.  A terrorist designation would eliminate any opportunity for U.S. diplomats to play a mediating role in support of UN-led peace talks. Worse, it would signal that the United States is uninterested in diplomacy and thereby risks empowering hardliners within the Houthis to abandon the peace process.

Sixth, the move will neither protect Americans from terrorism nor alter the trajectory of the conflict in Yemen: As the Brookings Institution’s John Allen and Bruce Reidel have pointed out, while the Houthis may be a dangerous extremist group, “they have not attacked Americans or Israelis.” Furthermore, if the FTO move is designed to pressure Iran, the theory of change is hard to discern. The Houthis don’t have foreign bank accounts to speak of. Nor do they engage in significant international travel. So, it’s hard to see how U.S. sanctions will significantly constrain their ability to fight – much less change Iran’s strategic calculus in the region.

The litmus test for U.S. policy on Yemen is simple: does it help end the conflict, or keep alive the millions of suffering Yemenis? A terrorist designation of the Houthis fails on both counts. Sadly, the Trump administration knows this. In 2018, it decided against designating the Houthis because “it could complicate aid deliveries.” Yet despite worsening humanitarian indicators, President Trump has now decided to push forward.

Luckily, President-elect Biden and his team will shortly be in a position to roll back a designation. They should also unfreeze USAID funding for relief operations in Houthi-controlled territory, push Gulf countries to fund the UN humanitarian response, and re-energize the Yemeni peace process. The people of Yemen have endured enough. Ending their suffering should be a “day one” priority for the incoming Biden administration.