US redesignates Houthis as a terrorist group: What it means

As part of efforts to stop Iran-backed Houthi militants from attacking vital Middle Eastern shipping lanes, Secretary of State Antony Blinken on Wednesday announced the U.S. would once again classify the Yemeni rebel group as terrorist organization -- a step the State Department says will enable the U.S. to more effectively restrict the group's access to financial support.

Blinken said that the restrictions and penalties linked to the designation would not take effect for 30 days, and that the delay was designed to ensure the flow of aid and commercial goods to Yemeni civilians is minimally impacted.

"The Houthis must be held accountable for their actions, but it should not be at the expense of Yemeni civilians," Blinken said in a statement. "As the Department of State moves forward with this designation, we are taking significant steps to mitigate any adverse impacts this designation may have on the people of Yemen."

Blinken also made clear that the decision could be reversed if Houthis ended their assault on maritime traffic.

"If the Houthis cease their attacks in the Red Sea and Gulf of Aden, the United States will reevaluate this designation," he said.

The move marks a significant turnaround for the Biden administration, which lifted two Trump-era terror designations against the Houthis just days after coming into power over concerns the measures -- including the one that was just reimposed -- would exacerbate a humanitarian crisis in the country.

ABC News spoke to officials and analysts to break down the ramifications of the designation and its potential impact.

What does the designation mean?

The U.S. government has a number of legal tools it can use to define foreign individuals and organizations as terrorists or supporters of terrorist activities, and each comes with its own set of repercussions.

The Biden administration previously removed the Houthis from the U.S. list of "foreign terrorist organizations" and its roster of "specially designated global terrorists" but has decided to reimpose only the latter.

The reason for this, State Department spokesperson Matthew Miller explained Wednesday, is that the "specially designated global terrorist" classification will allow greater maneuverability for entities working to benefit the Yemeni people to avoid running afoul of the law.

"A foreign terrorist organization designation ran the risk of having a deterrent effect on some of those aid groups continuing to provide aid -- worrying that they might be charged as providing material support to a terrorist organization," he said.

But Republicans on Capitol Hill have argued that administration should have also reinstated the foreign terrorist designation, which is generally considered to be harsher punishment because of its broader scope.

"President Biden and Secretary Blinken's decision to remove the FTO designation on the Houthis was a dangerous example of this administration's weakness and poor judgement," House Speaker Mike Johnson said in a statement. "Their decision today not to redesignate the Houthis as an FTO amount to continued appeasement of Iran."

Will the designation help stop Houthi attacks?

Although the Houthis and their primary financial and military supporter, Iran, are already subject to a slew of U.S. sanctions, administration officials say the designation will allow law enforcement to target the group's broader support network and stem the flow of resources fueling its strikes on commercial vessels.

"The effect we think it will have will be to allow us to deny the Houthis access to the U.S. financial system," Miller said. "This will give us tools not only to go after them, but also to enable the imposition of sanctions on the other bad actors who support them—something that we weren't able to do."

But some analysts argue the designation is more of a political move than a practical one.

"The Houthi designation now reads as an attempt to course correct after a political own goal," said Behnam Ben Taleblu, a senior fellow at the Foundation for Defense of Democracies.

"While the move is welcome, it might be a bit too little, too late, especially to impact Houthi resolve to continue their maritime campaign," he said.

In the wake of the announcement, the Houthis launched another strike on an American vessel, which started a fire on the ship but did not cause major damage or injuries to the crew.

"The Yemeni armed forces will not hesitate to target all sources of threat," the group said in a statement on Wednesday.

What about Iran?

U.S. officials say the designation of the Houthis is just one facet of the administration's strategy to choke the group off from its supply of arms -- pointing to the three recent U.S military strikes in Yemen as another.

"The large attacks that we conducted were designed to disrupt and degrade Houthi offensive capabilities, and we believe we did that," White House press secretary Karine Jean-Pierre said on Wednesday.

But Michael K. Nagata, a retired U.S. Army lieutenant general and a senior national security fellow at the Middle East Institute, says ending the threat posed by Houthis and similar, disruptive groups in the region depends on developing a better strategy for countering Iran.

"While US strikes have certainly already harmed some of the Houthis' capability for making mischief, much remains untouched there, and the Iranians will work quickly to shore up their losses," he said.

"Meanwhile, the rest of the Iranian network can easily compensate for whatever temporary setbacks the Houthis have suffered in other ways, whether inside Yemen, or elsewhere," Nagata added.