Aid groups as well as members of US President-elect Joe Biden's Democratic Party have warned that the move will severely impede efforts to address what the United Nations calls the world's largest humanitarian crisis.
United States Secretary of State Mike Pompeo has said Washington will designate Yemen's Houthi rebels as a terrorist group, a late-term move that aid groups fear will worsen a humanitarian crisis in the war-torn country.
With just 10 days left before President-elect Joe Biden takes office, the action could complicate the new administration's efforts to restart diplomacy with Iran, which has ties to the Houthis, and to reassess the US relationship with Saudi Arabia, which has led a brutal offensive in Yemen.
"The designations are intended to hold Ansar Allah accountable for its terrorist acts, including cross-border attacks threatening civilian populations, infrastructure and commercial shipping," Pompeo said in a statement, using the official name of the Houthi movement.
It has led a brutal campaign that has "killed many people, continues to destabilise the region and denies Yemenis a peaceful solution to the conflict in their country," he added.
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Pompeo pointed to a December 30 attack on an airport in Yemen's second city Aden, which killed 26 people and was blamed by the Saudi-backed government on the Houthis.
The rebel group controls much of Yemen and is already under US sanctions.
But a designation as a terrorist group is expected to scare away outside actors from many transactions with Houthi authorities, including bank transfers and buying food and fuel.
Houthis says they retain right to respond to US terror designation
Responding to Pompeo's announcement, a Houthi leader said Iran-aligned group reserved the right to respond to any US move to blacklist them.
"The policy of the Trump administration and its behaviour is terrorist," Mohammed Ali al-Houthi said in a Twitter post.
"We reserve the right to respond to any designation issued by the Trump administration or any administration.
'Terrorism designation a blow for Yemen'
The United Nations warned on Monday the US plan is "likely to have serious humanitarian and political repercussions."
UN spokesman Stephane Dujarric said it was imperative that the United States "swiftly grant the necessary licenses and exemptions to ensure that principled humanitarian assistance can continue to reach all people ... without disruption."
He also said the United Nations was "concerned that the designation may have a detrimental impact on efforts to resume the political process in Yemen, as well as to polarize even more positions of the parties to the conflict."
Aid groups as well as members of Biden's Democratic Party have warned that the move will severely impede efforts to address what the UN calls the world's largest humanitarian crisis.
The Norwegian Refugee Council, one of the main humanitarian agencies active in Yemen, said the designation and Pompeo's planned sanctions on the Houthis “will hamstring the ability of aid agencies to respond” to the humanitarian needs of millions of Yemenis.
“Yemen’s faltering economy will be dealt a further devastating blow,” said Mohamed Abdi, the group's director for Yemen. “Getting food and medicine into Yemen — a country 80 precent dependent on imports — will become even more difficult.”
Pompeo insisted that the designations – which will come into effect a day before Biden takes office on January 19 – will not impact relief work.
"We are planning to put in place measures to reduce their impact on certain humanitarian activity and imports into Yemen," Pompeo said.
"We have expressed our readiness to work with relevant officials at the United Nations, with international and non-governmental organizations and other international donors to address these implications."