Explained: Why Trump Considers Lifting Sanctions On Putin’s ‘Slush Fund’?

The Trump administration may be considering a major move to improve ties with Moscow: lifting sanctions on Russia’s main government investment fund, the Russian Direct Investment Fund (RDIF). US officials have long seen the fund as a key instrument through which the Kremlin extends its influence beyond Russia’s borders.

Russian officials have pushed for the US to lift the sanctions as part of wider talks on the fund’s role in shipping Russian diesel fuel to the United States, according to people familiar with the negotiations, the NYT reported.

A US official told the New York Post that the administration was reviewing the fund’s request to remove sanctions through established procedures. The official said the move was part of efforts to “improve U.S.-Russia relations and help end the war.”

Speaking anonymously because of the sensitive nature of the talks, the official also praised the fund’s chief, Kirill Dmitriev, calling him “a helpful envoy” in discussions with US negotiators aimed at ending the conflict.

The move could signal a major change in US policy towards Russia. Lifting the sanctions could reduce economic pressure on the Kremlin and give Moscow more opportunities to invest abroad and build business partnerships with other countries.

What Is The Sovereign Wealth Fund Of Russia?

A sovereign wealth fund is a state-owned investment fund that manages money and assets on behalf of a country. Governments typically use such funds to invest in businesses, support long-term economic goals, and generate returns for the state.

The Russian Direct Investment Fund, or RDIF, is a government-backed fund established in 2011 to attract foreign investment into Russia. It invests in companies and projects, often working alongside investors from other countries.

The RDIF has backed investments across different sectors and helped develop partnerships with foreign investors. One of its better-known projects was its role in developing Russia’s Sputnik V Covid-19 vaccine.

The fund is headed by Kirill Dmitriev, a Russian business executive who has also served as an economic envoy for Putin. Dmitriev has played a role in discussions between Moscow and Washington, including talks involving potential business cooperation.

Why Is It Called Putin’s ‘Slush Fund’?

The term “slush fund” usually refers to money kept or managed for discretionary purposes, often with concerns about how it is used or who benefits from it. In this case, the label reflects the US government’s assessment of the RDIF and its links to the Russian state and Putin’s inner circle.

The Biden administration imposed sanctions on the fund just days after Russia invaded Ukraine in 2022. At the time, it described the fund as “a slush fund” for Russian President Vladimir Putin and said it reflected “Russia’s broader kleptocracy.”

Eric Green, who was in charge of Russia policy at the White House National Security Council at the time, told The New York Times that targeting the fund was an early priority. He said its access to Western financial markets could help Russia fund its war.

Why The Trump Administration Wants To Remove Sanctions?

Lifting sanctions on the Russian Direct Investment Fund, which is worth billions of dollars, would mark a major shift in Washington’s years-long effort to pressure Moscow through economic restrictions.

The Trump administration sees business deals with Russia as a possible way to improve ties with Moscow and persuade Russian President Vladimir Putin to end the war in Ukraine.

The fund’s head, Kirill Dmitriev, has become an important Russian representative in economic talks with Washington. Steve Witkoff, Trump’s special envoy, praised Dmitriev while speaking to Putin, saying, “It’s been really, really good dealing with Kirill.”

The administration believes business agreements could show Russia the benefits of closer ties with the United States. However, critics warn that easing sanctions could benefit Moscow without securing any concessions over the war in Ukraine.

Green said lifting the sanctions would send “a real strong message that we are relaxing the previous position that we weren’t going to relax the economic sanctions and other costs until there was a settlement in Ukraine.”

How It Will Help Russia?

Russia could benefit from better access to international financial networks, more investment opportunities and new business partnerships. The Russian Direct Investment Fund has also played a role in efforts to supply Russian diesel to the United States.

Russian officials said three tankers carrying Russian diesel had left for the US this month. Deputy Prime Minister Aleksandr Novak credited the fund with providing “significant support”.

Fund chief Kirill Dmitriev has been seeking sanctions relief while helping arrange the diesel deal. However, the US Treasury Department says the suspension of sanctions announced on October 9 already allows the diesel transactions to go ahead.

Dmitriev has argued that such deals could help change US views on sanctions. “Sanctions are, in principle, philosophically wrong,” he said.

For now, the proposal remains under review. The key question is whether sanctions relief would help secure progress towards peace in Ukraine or give Russia greater economic opportunities without a corresponding change in its actions.

The decision could therefore become an important test of Trump’s strategy: whether closer commercial ties can help bring Moscow towards an agreement, or whether easing sanctions risks reducing pressure on the Kremlin before a settlement is reached.