The United States and its allies are the largest funders of UN activities, projects, and programs. As a result, U.S. decisions play a major role in shaping the scope and nature of international aid.
Over the past decade, Yemen has heavily relied on international humanitarian assistance to cope with its multiple crises, which have worsened due to the ongoing conflict since 2015.
Amid shifting U.S. policies, Yemen’s humanitarian situation remains dependent on UN funding plans and the political decisions that impact their implementation.
Recently, President Donald Trump, after returning to the White House, designated the Ansar Allah (Houthi) movement as a Foreign Terrorist Organization (FTO) in January 2025. This decision came as a shock to aid beneficiaries and humanitarian workers. Although Trump had made the same designation at the end of his previous term in 2021, the effects of this decision are expected to be far more severe this time around.
Trump’s First Designation (2021)
On January 10, 2021, just ten days before leaving office, Trump designated the Houthis as an FTO, the most severe classification level. However, the decision was not implemented immediately, as it was set to take effect on February 24, 2021, under the administration of President Joe Biden.
Biden, however, did not wait until the effective date and revoked the designation on February 12, 2021, less than two weeks before it was to take effect. He justified this reversal by citing concerns that the designation would further worsen Yemen’s humanitarian crisis.
Despite the reversal, humanitarian aid projects in Yemen saw a significant decline between 2021 and 2024.
In 2021, the UN set a budget of $3.85 billion for Yemen’s humanitarian response plan but received only $2.25 billion.
In 2022, the UN sought $4.27 billion but secured only $2.2 billion. In 2023, the funding requirement was $4.34 billion, while only $1.43 billion was received.
Partial Reclassification of the Houthis in 2024
Funding continued to drop significantly between 2021 and 2024. On January 17, 2024, Biden partially reclassified the Houthis by designating them as a "Specially Designated Global Terrorist" (SDGT) entity. This designation was far less restrictive than an FTO classification, as it did not impose severe financial and trade restrictions. Instead, it primarily targeted specific individuals and entities linked to the group.
However, this period coincided with a sharp decline in humanitarian aid, particularly in northern Yemen.
In 2024, the UN requested $2.71 billion for Yemen’s humanitarian response but received only $1.36 billion.
This ongoing funding shortfall has severely impacted humanitarian organizations’ ability to provide essential aid to millions of Yemenis who rely on it for survival.
The 2025 Reclassification and Its Potential Consequences
Just as efforts were ramping up to secure more funding for 2025, Trump issued an executive order on January 22, 2025, reinstating the Houthis' FTO designation. This decision has reignited debates about its potential impact on the millions of Yemenis who depend on aid and humanitarian funding.
What is particularly concerning is that many supporters of this designation view Houthi-controlled areas as if they are uninhabited, when in reality, two-thirds of Yemen’s population lives there. This means that any economic or humanitarian repercussions will directly affect the vast majority of civilians.
As the UN awaits donor commitments for its 2025 humanitarian plan, which requires $2.47 billion, the FTO designation casts serious doubt on how much will actually be raised. It also raises concerns about the financial and logistical restrictions that will hinder humanitarian operations.
Since an FTO designation imposes strict financial and trade restrictions, it will not only obstruct aid organizations’ ability to deliver assistance in Houthi-controlled areas but also expose any entity conducting financial transactions with the group to U.S. sanctions.
This could lead to broader economic isolation for Yemen, with significant repercussions for the commercial sector. Houthi-controlled areas rely almost entirely on imports, and any disruption in supply chains could trigger price hikes and shortages of essential goods. This comes as the UN reports that more than 19.5 million people in Yemen require humanitarian assistance and protection—an increase of 1.3 million compared to the previous year.
A Risk Yemen Cannot Afford
The consequences of this decision will not only impact the Houthis but will primarily harm millions of civilians.
In 2021, the previous FTO designation’s effects were never fully tested, as Biden rescinded it before it took effect. However, with the 2025 reclassification, Yemen is now facing an unprecedented scenario.
At a time when Yemenis cannot afford further instability, this move demands a thorough assessment of its potential humanitarian and economic consequences. Given the severity of the crisis, Yemen cannot afford any new risks that could further devastate its fragile humanitarian situation.
