Kremlin Says It Is Negotiating With Washington to Lift US Sanctions on Russia’s RDIF Fund

Russia is negotiating with the Trump administration to lift US sanctions on the Russian Direct Investment Fund (RDIF), the state investment fund run by Kirill Dmitriev, the Kremlin aide Yuri Ushakov said, Reuters reported on Wednesday 28 October.

“This conversation is going on. It has been going on for a while. I don’t know what the outcome will be,” Mr Ushakov told Russian news agencies, according to Reuters. Mr Dmitriev, who is also President Vladimir Putin’s envoy in talks with Washington, “is active in his contacts and that’s why the issue is under discussion,” he said. On the American side there is no public statement from the Treasury. Analysts at the Atlantic Council wrote on 27 October that the administration is reviewing Moscow’s request and that US officials have confirmed it is under consideration. Nobody has said a decision has been made.

The request arrives with a diesel deal. On 9 October the Treasury’s Office of Foreign Assets Control (OFAC) issued General License 135, which, the Atlantic Council notes, authorises transactions related to the sale, delivery, offloading and importation of Russian-origin diesel fuel through 7 April 2027. This publication wrote at the time that a license is not a repeal. Mr Dmitriev has been promoting the fund as a channel for diesel transactions, the Atlantic Council says, although delisting it “isn’t strictly necessary to make the deal work,” because dozens of Russian banks remain unsanctioned.

Why was the fund sanctioned?

For being owned or controlled by the Russian state. OFAC blocked the RDIF on 28 February 2022, four days after the invasion of Ukraine, under Executive Order 14024. The Treasury’s announcement gives the ground: the fund was designated “for being owned or controlled by, or for acting or purporting to act for or on behalf of, directly or indirectly, the Government of Russia.” It described the fund as created in 2011 by order of Dmitry Medvedev and Mr Putin and said that, “while officially a sovereign wealth fund, RDIF is widely considered a slush fund for President Vladimir Putin.” Its management company, a subsidiary, and Mr Dmitriev personally were designated the same day.

The fund was not new to the list. The same release records that in 2015, after Russia’s first attack on Ukraine, OFAC imposed debt and equity restrictions on the management company’s predecessor under Directive 1 of a different order, Executive Order 13662. The 2022 action expanded those into a full block.

How does a name come off the list?

By petition to OFAC, decided by OFAC. The procedure is in 31 CFR 501.807. A sanctioned person may submit “arguments or evidence that the person believes establishes that insufficient basis exists for the sanction or that the circumstances resulting in the sanction no longer apply.” It may propose remedial steps, “such as corporate reorganization, resignation of persons from positions in a blocked entity, or similar steps.” OFAC reviews the material, may ask for more, need not hold a meeting, and then “will provide a written decision.” There is no public comment period and no deadline.

The regulation fits a company that has changed hands or removed a sanctioned executive. On this publication’s reading, the RDIF case is harder to fit to it. The ground for the 2022 designation was state ownership or control, and the fund is still the Russian state’s. The remedial step the regulation names, the resignation of persons from positions in a blocked entity, would here mean Mr Dmitriev, the official conducting the negotiation. The same machinery, applied as written, is one this publication has argued is running out of room.

Does Congress get a say?

Only over the sanctions it named, and the 2022 order is not among them. The Russia Sanctions Review Act, section 216 of the 2017 Countering America’s Adversaries Through Sanctions Act, is codified at 22 U.S.C. 9511. Before taking “an action to terminate the application of any sanctions described,” the president must send Congress a report. There follows a 30-day review, 60 days if the report arrives between 10 July and 7 September, during which the president “may not take that action” unless Congress passes a joint resolution of approval. Congress may also pass a joint resolution of disapproval.

The sanctions described are those under that chapter, “including the Executive orders codified under section 9522.” Section 9522 codifies six orders: 13660, 13661, 13662, 13685, 13694 and 13757. Executive Order 14024 was signed in 2021 and is not one of them. The table sets out how each instrument in this case lines up against the statute. It is this publication’s reading of the text; neither government has said publicly how it reads it.

The 2015 row is the complication. Those restrictions were imposed under a codified order, so terminating them would be an action the review law names. Whether removing the 2022 block would also lift whatever remains of the 2015 restrictions, and so start the 30-day clock, is a question neither the Kremlin’s account nor any US statement has addressed. The diesel licence falls under a separate clause, which reaches “a licensing action that significantly alters United States’ foreign policy with regard to the Russian Federation.”

The ground on which the Treasury blocked the fund was that it is owned or controlled by the government of Russia. Nothing in the public record suggests that has changed.