The Biden administration moved to reapply sanctions this week on the Iran-backed Houthi rebels, but did so under a weaker federal statute that will not criminalize support for the terrorist group or force American banks to seize their assets, current and former U.S. officials told the Washington Free Beacon.
After months of Houthi attacks on U.S. and Western ships in the Middle East, the Biden administration announced late Tuesday that it will be placing the Houthis on the Specially Designated Global Terrorist (SDGT) list, which applies a range of new sanctions on the group, effective Feb. 16.
This designation, however, is significantly weaker than the one applied by the Trump administration, which labeled the Houthis as a Foreign Terrorist Organization (FTO), a far more stringent classification that criminalized all support for the militant group and forced U.S. banks to seize the group's funds. Upon entering office in 2021, the Biden administration removed the Houthis from the FTO list as a gesture of good will toward Iran as it pursued diplomacy with the hardline regime.
The Iran-backed, Yemen-based militant group has been wreaking havoc in the Middle East for months, attacking Western military and commercial ships in a show of support for Hamas's war on Israel. The attacks have drawn a tepid U.S. response that has included limited U.S. retaliatory strikes on the group's infrastructure, prompting accusations from Republican lawmakers and former officials that the Biden administration is scared of confrontation with Iran and its terrorist proxies. Tuesday's designation followed weeks of public pressure from Congress but is already generating criticism for being issued under a weaker federal statute.
"This is a bait and switch," Richard Goldberg, a senior adviser at the Foundation for Defense of Democracies and sanctions expert who served on the White House National Security Council, told the Free Beacon. "Get the media to write they're listing the Houthis as a terrorist group while obscuring the decision not to relist the group as a foreign terrorist organization. They know FTO status would put maximalist pressure on the Houthis—which is why they won't do it."
Faced with questions about the Biden administration's decision to pursue a weaker designation, a senior official told reporters on Wednesday that the Specially Designated Global Terrorist listing will give the administration "better flexibility" to pump U.S. aid money into war-torn Yemen and ensure "there aren't unintended consequences for the humanitarian situation and the people of Yemen."
"We believe that the SDGT designation is the appropriate tool at the moment to pressure the Houthis," the administration official said. "I think we are always trying to make sure that the impact of our sanctions is—it's used for the desired foreign policy effect while minimizing unintended consequences."
Under the SDGT designation, the Houthis can still gain access to American visas, and lending support to them is not considered a criminal penalty under the law, according to Goldberg and other former senior U.S. officials. American banks will not be forced to seize the terror group's funds under this designation.
"By refusing to label the Houthis as a Foreign Terrorist Organization, Biden is preventing several important policies to keep Americans safe and the Houthis weaker," Gabriel Noronha, a former State Department adviser on Iran, told the Free Beacon.
"Currently, Houthi members could apply and receive a U.S. visa," he explained, adding that an "FTO designation allows the Department of Justice to prosecute any American who swears allegiance or provides material support to the Houthis, with penalties and enforcement far more robust than the SDGT designation."
An FTO designation would also allow the victims of Houthi terror attacks to receive compensation from any funds the government seizes from the group, something that is not possible under the current listing.
"Returning the Houthis to the Specially Designated Global Terrorist (SDGT) list is only a half-measure, one that senior administration officials immediately conceded they could rescind if the Houthis stop attacking ships," Noronha said. "That's not the point of terror sanctions—they should be maintained until the terrorist groups are eliminated entirely."
Republican lawmakers who spoke to the Free Beacon said the Biden administration was clearly pressured into making the designation and chose to issue it in a form that gives the Houthis breathing room.
"It doesn't take a genius to know that the Treasury Department's terrorism sanctions list and the State Department's terror list are not the same," said Rep. Kevin Hern (R., Okla.), the chairman of the Republican Study Committee, Congress's largest GOP caucus. "The Houthis are terrorists. Why doesn't Biden agree?"
Rep. Mike Turner (R., Ohio), the chairman of the House Permanent Select Committee on Intelligence, said on Wednesday that "designating the Houthis as a 'Specially Designated Global Terrorist' only applies sanctions and avoids taking any real action. It's time to lead and protect and call them what they are—a Foreign Terrorist Organization."
A senior congressional official who works on foreign policy issues accused the Biden administration of "trying to fool Americans and Congress with a fake designation that still gives the Houthis—and Iran—a pass from truly tough action."
Advocacy groups that track foreign affairs also noted the difference between an SDGT designation and FTO listing.
"The Houthis are a foreign terrorist organization, but the Biden administration would rather classify them as an SDGT, to avoid being called out for their about-face," Paul Teller, the executive director of conservative advocacy group Advancing American Freedom, said in a statement. "This administration is more afraid of a bad headline than global threats. It's time to quit playing games and treat U.S. enemies as they deserve to be treated."