RIYADH/WASHINGTON (Reuters) - The outgoing U.S. administration is to designate Yemen’s Houthi movement as a foreign terrorist organization, a move the United Nations warned could have serious repercussions for peace talks and efforts to combat the world’s largest humanitarian crisis. A leader of the Iranian-aligned group, which has been battling a Saudi-led coalition in Yemen since 2015 in a war widely seen as a proxy conflict between Iran and Saudi Arabia, said it reserved the right to respond. Secretary of State Mike Pompeo announced the move, which will include sanctions against the movement and three of its leaders, in a statement late on Sunday, hours after Reuters reported it. It will come into effect on Jan. 19, the Trump administration’s last day in office. “It’s clear that the decision is likely to have serious humanitarian and political repercussions,” U.N. spokesman Stephane Dujarric told reporters on Monday, urging Washington to swiftly grant exemptions to ensure aid is not disrupted. Dujarric 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 the positions of the parties to the conflict.” The U.S. administration has been piling on sanctions related to Iran in recent weeks, suggesting to some that Republican President Donald Trump wants to make it harder for Democrat Joe Biden’s administration to re-engage with Iran and rejoin an international agreement on Iran’s nuclear programme after he becomes president on Jan. 20. For Biden to undo the designation would require a lengthy legal review, and he could also face political obstacles from Iran hardliners in Congress. Yemen’s Saudi-backed government called for more further pressure on the Houthis, who seized the capital Sanaa in late 2014 and control much of northern Yemen. Saudi Arabia, which has been attacked by missiles and drones launched from Yemen by the Houthis, said the designation would “neutralise” the Houthi threat by preventing it securing arms and funds. “It ... will force the leaders of the Houthi militia backed by Iran to seriously return to the negotiating table,” the Foreign Ministry said in a statement. ‘BANKRUPT U.S. GOVERNMENT’ The Houthis say they are fighting a corrupt system and deny being controlled by Iran. Houthi official Mohammed Ali al-Houthi said it was the Trump administration’s behaviour that was “terrorist”, tweeting: “We reserve the right to respond to any designation...” An Iranian Foreign Ministry spokesman told a weekly news conference that a “bankrupt U.S. government” was poisoning its legacy and tarnishing the United States’ image. Members of the Houthi movement take a selfie near the grave of senior Houthi official Saleh al-Sammad at al-Sabeen Square in Sanaa, Yemen January 11, 2021. REUTERS/Khaled Abdullah The United Nations is trying to revive talks to end Yemen’s conflict, which has driven the poorest state on the Arabian peninsula into an economic and humanitarian crisis, exacerbated by the COVID-19 pandemic. U.N. Secretary-General Antonio Guterres had warned against a possible designation, saying Yemen was in imminent danger of entering the worst famine the world has seen for decades. Oxfam America’s humanitarian policy lead Scott Paul called Pompeo’s move “counter-productive and dangerous”. The Norwegian Refugee Council called for guarantees to ensure sanctions did not prevent deliveries of food, fuel and medicines - which 80% of the population rely on. He said the U.S. Treasury Department would provide licences for some humanitarian activities conducted by non-governmental organizations in Yemen and for some transactions related to exports of critical commodities such as food and medicine. International relief officials have said such licences often fail to reassure banks and insurance firms that they will not fall foul of sanctions. The designation has been the subject of weeks of fierce debate within the administration, and disagreements over how to carve out exceptions for aid shipments held up a final decision, multiple sources said. “The Houthis are an integral part of Yemeni society,” said Ryan Crocker, a retired U.S. ambassador who served in the Middle East. “This is making a strategic enemy out of a local force that has been part of Yemen for generations.”