What Will Change After the Re-designation of Houthis as a ’Terrorist Group’?

On February 16, 2024, the United States’ re-designation of the Houthis as a ‘Specially Designated Global Terrorist’ (SDGT) group came into effect due to their ongoing attacks against vessels in the Red Sea. This came after the expiration of the 30-day deadline announced by Washington, which also said it would reevaluate its position if the Iran-backed group ceased its attacks. 

However, on the very day the deadline expired, the Houthis responded by launching a missile attack on the British oil ship ‘Pollux’ in the Red Sea. The group has expanded its attacks in an unprecedented way to target American military vessels in the Red Sea with ballistic missiles for the first time . 

The ‘SDGT’ re-designation of the Houthis is not seen as having any significant impact, especially since the American strikes have not achieved any decisive outcome against the group’s capabilities and have also failed to reduce tensions in the Red Sea and the Gulf of Aden. The military purpose of the US-led strikes1, that were known in advance, have encouraged the religious group to continue with their escalation. 

Recently, major Saudi media platforms praised the description of Saudis as “brothers” by a Houthi official. For nine years, the Houthis kept calling Saudi Arabia as an ”aggressor”. However, despite these recent friendly statements by the Houthis and Saudis about the bilateral peace efforts, it appears that Rashad Al-Alimi, Chairman of the Presidential Leadership Council (PLC - the executive body of Yemen's internationally recognized government), is more motivated to fighting the Houthis than engaging with them in such a process. The gentleman is eager to strike a partnership with ’NATO‘ to confront the Houthi naval threats. He exploited his participation in the ‘Munich Security Conference’ to call on the international community to expand the designation of Houthis as a “terrorist” group and to support the Internationally-Recognized Government to control all the Yemeni territories. This he said would reduce the Houthi threats against maritime shipping as well as regional and international security. Earlier, PLC Member and President of the Southern Transitional Council (STC), Aidrous Al-Zubaidi, called for adopting “a comprehensive military, political and economic approach against the Houthis”.

These calls by both leaders reveal a possible resumption of the fight against the Houthis provided they receive support and the international green light for it. This is because engaging in a fight without an international political cover will ignite accusations against them of obstructing the Yemeni peace efforts.

Due to the increasing severity of the crisis, it seems that the US’ re-designation alone will not affect the negotiation path if the regional parties, especially Riyadh and Muscat, sign a deal, with the agreement of the Yemeni government, to resume the political process. In October 2022, the Yemeni government designated the Houthis as a “terrorist” group after the militia bombed the oil ports in Hadramout and Shabwa. However, this did not prevent the government later from indirectly negotiating with the Houthis. 

Moreover, the restrictions on the Houthis regarding access to the financial markets due to the re-designation will not largely affect their funding networks which are basically far from international financial transactions. 

In February 2023, investigations conducted by the Panel of Experts on Yemen affiliated with the UN Security Council revealed several sources by which Houthis have amassed money illegally to fund the war efforts in Yemen, including through customs, taxes, zakat (donations), non-tax revenues and others. 

Some Yemenis who reside in the United States and have links with the Houthis may be affected. They may take precautionary measures to reduce their activities to avoid any sanctions. The American measures will freeze any Houthi assets and prohibit any form of US dealings except for what is related to the humanitarian side through the continuous issuance of general licenses that support the access to essential goods and services in Yemen.

The current Saudi-American relationship is apparently not at its best. Riyadh has not participated in the ‘Operation Prosperity Guardian‘ naval coalition in the Red Sea or in the US-UK strikes against the Houthis. It seems that Saudi Arabia does not want to engage in a new war in Yemen. The Gulf kingdom, which is racing against time to achieve its Economic ‘Vision 2030’, has concerns about the cross-border Houthi drone and missile threats. Therefore, moving toward a negotiation path to end the war appears to be currently a profitable deal for the Saudis. 

Indeed, the Biden Administration has frustrated Riyadh and Abu Dhabi with its many positions since it took office in January 2021. During his election campaign, Joe Biden pledged to turn Saudi Arabia into a “pariah state” and to halt the sale of ‘offensive’ weapons to it in the Yemen war due to its humanitarian violations. Following the Houthi attack against its facilities in early 2022, Abu Dhabi expected that the American response would be more than mere condemnation. The UAE asked Washington at the time to re-designate the Houthis as a terrorist group, but the US ignored this demand. In light of the current Israel-Hamas war, the US website ‘Politico’ says, “some Arab countries including the UAE are increasingly restricting the US from using military facilities on their soil to launch retaliatory airstrikes on Iranian proxies”.2 This is a clear message to Washington that its strikes should be far from the UAE. Thus, it is unlikely for Saudi Arabia and the UAE to support Washington with a security and military operation against the Houthis in the Red Sea. This is because both countries want to protect their vital interests. They are probably looking forward to the success of the rapprochement paths with Iran. This is in addition to the challenges imposed by the violent Israeli war against Gaza. 

The developments of the military events in the Red Sea and the Gulf of Aden will probably push the United States or Britain to submit a draft resolution to the UN Security Council to criminalize the Houthis and impose international sanctions against the group. This includes an air embargo and freezing assets, like of other known terrorist organizations such as Al-Qaeda and ISIS. It is worth mentioning that the current American designation is still considered a temporary measure related to the nature of the direct escalation developments in Gaza. Moreover, whether the designation will remain in place, or be expanded to include the Foreign Terrorist Organization (FTO) label, or even be rescinded, depends on the change in the Houthis’ conduct, and the scale and outcome of the Gaza conflict.

So far, the possible options of the Yemeni parties are not clear. The indications of the current events lead to two scenarios:

The first is the resumption of the negotiations path between the Yemeni parties through regional and international sponsorship, led by Saudi Arabia, Oman, and the United Nations. This will ultimately lead to the end of the war officially. However, in light of the Houthi threats against international shipping and the economy, the negotiation path will ultimately serve as a big prize for the group which will be able to consolidate its influence on a large scale. The Southerners reject any talks of peace amid the ongoing Houthi attacks.

The second scenario is preparing for a resumption of the internal ground war, with American-British logistic support delivered to the different factions of the Yemeni military forces. This may restrict and blockade the Houthi moves from all directions, including their fighting axes on land, sea, and air. In this scenario, Iran will not likely engage directly in the war like what it did in Gaza. By supporting the Houthis and encouraging them to target vessels in the Red Sea, Tehran has tried to push the conflict to areas far from its borders. Moreover, it cannot be said that Iran will sacrifice the Houthis. In case of the launching of a comprehensive military operation, Iran will not be able to protect the Houthis or supply direct military support to them in light of the current restrictions. Its support will not go beyond the consultative and intelligence role as well as smuggling various weapons, as it has done with the Houthis for years. 

The plan to reduce or eliminate the Houthi influence in Yemen will be effective only if the military operations move forward directly to Sanaa, the center of the group’s political and military decision -making. Resolving the matter decisively in Sanaa would automatically besiege the Houthis in other Yemeni governorates under their control, including the western coast overlooking the Red Sea. For example, before December 4, 2017, when the forces affiliated with former President Ali Abdullah Saleh began to confront the Houthis in some streets in Sanaa with reports that they achieved victories, the Houthi political and military control over governorates such as Hajja, Al-Mahwit and Ibb collapsed. However, the Houthis quickly regained their control after the assassination of Saleh. This indicates that controlling Sanaa is more important than the other areas. 

Keeping in mind both scenarios or without them, the United States should seriously consider the importance of enhancing the military capabilities of the forces in South Yemen with sophisticated defense systems which would largely diminish the threats of the Houthi missiles against international shipping in the Gulf of Aden and Bab Al-Mandab Strait. A practical progress against the Houthis cannot be achieved without enhancing the defensive or combat capabilities of the forces affiliated with the Internationally Recognized Government in the south-western coasts of the country. 

However, one cannot ignore the fact that any return to the war against the Houthis will not be possible in the absence of a supportive Saudi-Emirati stance. Riyadh and Abu Dhabi still influence the positions of the official government and the PLC. So far, it appears that Riyadh, Abu Dhabi, Washington, and Brussels are avoiding launching of an expensive war that would end the relative peace experienced in Yemen for two years and ignite more regional tensions that will lead to an unimaginable end.