The «SDGT» Designation of Houthis - What Next?

On January 17, 2024, the US Department of State announced the re-designation of the Yemeni group ’Ansar-allah‘, also known as the Houthis, as a ‘Specially Designated Global Terrorist’ group (SDGT) as part of its terrorism list. The decision will take effect 30 days after the announcement. Washington attributed the redesignation move to the Houthi naval threats against the free flow of trade in the Red Sea area in a way that violates rights and navigational freedom. The US Department of State said: “If the Houthis cease their attacks in the Red Sea and Gulf of Aden, the United States will immediately reevaluate this designation.” The move comes as a response to the Houthi’s continuous missile and drone attacks on maritime navigation traffic since November 2023 under the pretext of solidarity with Gaza. This has pushed many major shipping companies to change course by circumnavigating Africa.

It must be pointed out that the US Administration had revoked the designation of the Houthis as SDGT and as a Foreign Terrorist Organization (FTO) on February 16, 2021, nearly a month after Joe Biden’s inauguration as US President. Former US President Donald Trump had announced the designation in January 2021, days before the end of his term. At that time, the Biden Administration’s reversing the terror designation came as a second move along with Washington’s suspension of its military support to the Saudi-led Arab Coalition in an attempt to arrive at a diplomatic solution in Yemen. This was reflected in the appointment of Tim Lenderking as the first US Special Envoy for Yemen on February 4, 2021, along with Hans Grundberg being appointed the UN Special Envoy to Yemen in August that year. 

Some believe that the designation of the Houthis in 2021 and its subsequent cancellation were part of the quibbles of American internal politics. However, revoking the decision was justified as a result of the warnings by the United Nations and independent humanitarian organizations, including the ’International Committee of the Red Cross‘ as well as 19 international non-governmental humanitarian relief organizations operating in Yemen, that the designation could lead to starvation. They voiced concerns that this could interrupt the flow of imports and basic goods to Yemen, including food and medicine.

The latest re-designation of the Iran-backed group is merely a symbolic one. This is because the new decision is limited to the mitigated “SDGT” designation under Executive Order (E.O.) 13224, and minus the severe designation of ‘Foreign Terrorist Organization’ which was slapped on the group in 2021. The SDGT classification targets “terrorists, terrorist organizations, leaders of terrorist groups, and those providing support to terrorists or acts of terrorism. Ansarallah is being designated for having committed or attempted to commit, posing a significant risk of committing, or having participated in training to commit acts of terrorism that threaten the security of United States nationals or the national security, foreign policy, or economy of the United States”, the US State Department said. The Biden Administration has been heavily criticized for lessening the designation, and for its reluctance to classify the Houthis as a ‘FTO’. It is remarkable that the Yemeni militia continues to open fighting fronts inside Yemen and commits humanitarian violations. They have audaciously expanded their attacks on commercial and civil vessels in the Red Sea and the Gulf of Aden, thus moving the conflict to an international level after it had been limited to a local and regional one. 

Undoubtedly, the United States believes that it is committed to taking some firm action in order to save face in the region in response to the Houthi escalation. This is along with the political pressure on the Biden Administration as a result of its soft approach toward the Houthis during the nearly one decade-long conflict in Yemen. The Biden administration had actually begun to consider the re-designation of Houthis in the wake of their attacks against vital oil facilities in Abu Dhabi in mid-January 2022. However, Washington engaged in other paths to restore its prestige in the region. It enhanced its efforts to complete a Saudi-Israeli normalization agreement as well as mending its relationship with Riyadh by making use of the Yemeni issue. This is particularly related to the fact that Saudi Arabia began to re-evaluate its geopolitical bets and resort to other regional and international options away from the United States. Moreover, the raging military escalation in Gaza after October 7, 2023, (Al-Aqsa Storm operation) has prevented Washington from accomplishing its endeavors in the region. 

Although there are international parties that reject the designation as a move that would obstruct the flow of aid to those affected by the war in Yemen, others believe that the outcome of the decision won't match Washington's expectations and won't change anything in the maritime equation if it takes effect. This is particularly due to the fact that it is mainly related to funding and financial transfers. Therefore, its impact on the Houthis may be partial, whether through freezing of their assets or banning their access to the international financial systems. However, this will largely affect remittances from Yemeni expatriates to the areas controlled by the Houthis. Those remittances are among the most important sources of external finance for Yemen. They sometimes exceed the oil and gas exports that have heavily decreased since the Houthi coup against the state in 2014. 

Before the expiration of the 30-day ultimatum, the US Administration will try to contact financial institutions, non-government organizations, the United Nations and humanitarian agencies to discuss carrying out the designation of the Houthis and the possible exception from sanctions. This would be in addition to allowing the commercial shipments including food, medicine and fuel. The Houthis have adopted a careless approach as they described the re-designation as being “insolvency”.  They believe that they enjoy Arab and popular global support for what they claim as standing with Gaza. Consequently, the timing of the violent war launched by Israel against Gaza has created a global opinion that the aim of the maritime coalition, led by the US and Britain, and its strikes on Houthi sites in Yemen is to defend Israel, and not as a result of the Houthi attacks on vessels in the Red Sea and the Gulf of Aden which have disrupted maritime navigation. 

 This opinion has been based on the West’s officially-announced pro-Israeli stance.

It is important to state that the Houthis have amassed huge wealth during the years of conflict in Yemen. Moreover, the impact of the banning measures on the Houthis will be below international expectations. A report by the Panel of Experts on Yemen affiliated with the UN Security Council estimates that the Houthis diverted at least $1.8 billion in one year. This confirms that their average amount of looted money exceeds $14 billion. This money is being laundered through new investments as well as buying real estate and lands. Part of the money is allocated for political gains and military efforts. This is in addition to foreign monetary aid that they have possibly received from Iran’s 'Islamic Revolutionary Guard Corps’ whose official budget is $8.2 billion. Iran spends $16 billion annually to support terrorists and rogue regimes, according to the ‘Foundation for Defense of Democracies’ (FDD). In December 2023, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) “designated one individual and three entities responsible for facilitating the flow of Iranian financial assistance to Houthi forces and their destabilizing activities”, which proves that Iran actively provides the Houthis with funds.

Many Yemenis consider that revoking of the FTO designation on the Houthis in 2021 has been basically a huge mistake. They also feel that suspension of the Al-Hodeidah military operations, by the Arab Coalition and the anti-Houthi local forces following the Stockholm Agreement in 2018¹, was one of the biggest strategic mistakes which was internationally sponsored. The Houthis have violated the agreement and continued building their financial capabilities. They seized control of larger geographical areas over the three years since the American designation was revoked. Additionally, they continued launching missile attacks on strategic and vital locations outside and inside Yemen, not the least of which are the ports of Hadramout and Shabwa in South Yemen. Targeting the ports led to the cessation of oil exports and a sharp decline in public revenues. This is an additional disaster that has aggravated the living and humanitarian situation in the areas controlled by the Internationally-Recognized Government, especially as it used to allocate a large part of this revenue to improve the public services and pay the employees’ salaries.

Therefore, the current soft designation, and the Houthi’s intransigence in not stopping their attacks in the Red Sea and the Gulf of Aden won’t affect them, as the militia plays a clear role on behalf of a bigger regional force in the Region. They have their own funding sources that can be obtained ultimately through illegal ways such as smuggling. The repercussions will directly affect the Yemenis inside the country and not others. This accordingly reveals the failure of the comprehensive American vision for the conflict in Yemen since its very beginning. The United States placed a losing bet on the Houthis as a group than can go with a peace formula. This has ultimately led to a larger tension in the region.

The Saudi-led regional efforts to get out of the Yemen war have become more complicated today. Riyadh and Muscat counted on a roadmap that they formulated in April 2023 after unilateral talks with the Houthis. They later submitted it to the UN Special Envoy to Yemen Hans Grundberg. All Yemeni parties were supposed to sign it in early January. However, the accelerated Houthi escalation in the Red Sea and the Gulf of Aden has prevented that. The Houthis want to make more gains for themselves and Iran by expanding the conflict and creating new levels of violence in the region. This policy has been long adopted by Tehran through its agents in many of its negotiation files. 

It is important to note that the current path followed by the US and its allies regarding Yemen won’t ultimately lead to pacification in the region as the conflict will escalate to broader phases. Washington and its allies will have to examine two options. The first one is to re-designate the Houthis as an ’FTO‘, especially since their cooperation with other designated extremist groups has been proven on more than one occasion. Based on that, military and logistic support can be provided to the local Yemeni military forces in order to confront and reduce the Houthi influence, especially in the areas adjacent to the Red Sea, Bab al-Mandab Strait and the Gulf of Aden. This will make the Houthis focus on defending the areas under their control. The second option is to reach an understanding with Iran like what Saudi Arabia did through Chinese mediation 2 that shortened the path toward a settlement in Yemen. The pressure on the Houthis by Tehran will stop their maritime attacks and mitigate the situation in the region. Nonetheless, this option will be linked to political costs that will be paid by Washington and its allies in favor of Iranian interests. This will accordingly lead to the return to the path of diplomatic efforts to stop the war in Yemen. Without these decisive options, the region won’t witness stability for a long time.