WASHINGTON — The State Department on Friday said it would lift a terrorist designation against Houthi rebels in Yemen that the Trump administration had issued in its final days, revoking penalties that aides to President Biden worried would bring more pain to millions of starving people than to the rebels.
Three officials familiar with the decision said the Biden administration had notified Democrats in Congress on Friday evening that it would scrap the designation, which served as President Donald J. Trump’s final jab at the Houthis’ main patron, Iran.
Caught in widespread poverty and civil war, about 80 percent of Yemen’s population of 30 million people live in areas under Houthi control. The United Nations secretary general, António Guterres, said in November that Yemen was “in imminent danger of the worst famine the world has seen for decades.”
Senator Christopher S. Murphy, Democrat of Connecticut, said in a statement that removing the terrorist designation would “save lives.”
“The designation did not impact the Houthis in any practical way, but it stopped food and other critical aid from being delivered inside Yemen and would have prevented effective political negotiation,” Mr. Murphy said.
A State Department official said lifting the designation did not excuse the Houthis’ conduct, including attacks against civilians and the kidnapping of Americans. But, the official said, keeping the rebels on the State Department’s list of foreign terrorist organizations would accelerate the world’s worst humanitarian crisis.
The terrorist designation was in place for just under a month. It was never clear that it would inhibit the rebels who overthrew the Saudi-backed government in Yemen in 2014 and, some analysts said, pose no direct threat to the United States.
But it had a chilling effect on commercial food importers and humanitarian aid workers who feared they would face criminal penalties if their goods fell into Houthi hands. The rebels control the capital, Sana, and parts of the strategic port city of Al Hudaydah, where much of the humanitarian aid from across the world is unloaded.
“We want to make sure that we are not doing anything to make life worse or even more miserable for the long-suffering people of Yemen,” Ned Price, a State Department spokesman, said Friday afternoon before the designation was lifted.
The reversal was widely expected. Last week, on his first full day in office, Secretary of State Antony J. Blinken said a review of the terrorist designation was “the priority in my book.”
Officials said the terrorist designation was lifted before it could have a widespread effect. Had it remained in place, the relatively decentralized rebel movement would have been denied financial support and other material resources that are routed through U.S. banks or other American institutions.
But the Houthis’ main patron is Iran, which has continued to send support despite being hobbled by severe U.S. economic sanctions, rendering the effect of the designation on the Houthis more symbolic than searing.
As part of its pressure campaign against Iran, the Trump administration sought to curb Tehran’s military reach in Yemen, where it had sent weapons and other assistance to Houthi fighters. Mr. Trump’s crackdown on the rebels also firmly planted the United States on the side of Saudi Arabia and its allies in the war in Yemen, providing intelligence and billions of dollars in weapons over the objections of Congress.
On Thursday, Mr. Biden said he would end U.S. support for Saudi Arabia in its intervention in Yemen, following accusations of indiscriminate bombings that have killed civilians and other military atrocities that could amount to war crimes.
Mike Pompeo, who oversaw the terrorist designation as Mr. Trump’s secretary of state, has accused the Houthis of a Dec. 30 attack on the civilian airport in the Yemeni city of Aden, which killed 27 people, as evidence of the Houthis’ capability for terror. No one had claimed responsibility for that attack, and both Al Qaeda and the Islamic State are active in the area.
But the terrorist designation was rushed out before the Trump administration could enact clear-cut legal protections for importers and aid workers to ensure that goods could continue to reach Yemen. The vast majority of food in Yemen is imported.
“This purely counterproductive designation had caused months of uncertainty as aid organizations, banks and importers of critical commodities like food and fuel were left in limbo,” said Scott Paul, the humanitarian policy lead for Oxfam America.
He said it was the humanitarian consequences of the terrorist designation — not the Houthis’ conduct — that “warrants this reversal.”
Edward Wong contributed reporting.