U.S. President Donald Trump’s administration is reportedly ready to lift sanctions on Russia imposed after the start of the full-scale invasion, in a reversal of U.S. policy toward Moscow during its war against Ukraine.

The White House is preparing a plan to potentially give Russia sanctions relief for several entities and Russian citizens as part of negotiations to end the war in Ukraine, Reuters reported on March 3. The move is a stark shift from a sanctions policy by former President Joe Biden’s administration that included the “mother of all sanctions.”

Europe and the G7 nations want to keep sanctions to throttle Russia’s economy and continue to pressure Russian President Vladimir Putin. They may have no other option than to follow Washington to maintain unity among Ukraine’s allies and avoid being a pariah in the global economy.

“The big revenue raising opportunities for Russia are still linked to business connected with Europe, and Europe can stand fast on that. But very quickly Europe would find itself marginalized,” said Tom Keatinge, director of the Center for Finance and Security at the Royal United Services Institute (RUSI), a think tank.

Although the effectiveness of sanctions has been debated, they have clearly gotten under the skin of Putin, who has repeatedly called for their end. Sanctions, particularly on the oil and gas industry, have been a headache for Moscow, forcing it to resort to a shadow fleet to sell discounted fuel while incurring higher export costs.

So far, Europe has not said if it will keep sanctions in place or not. Kyiv’s sanctions commissioner, Vladyslav Vlasiuk, called on European allies to commit to sanctions “for as long as necessary.”

If the U.S. unilaterally lifts sanctions, it would be a huge win for Putin and a further sign that the Western alliance is crumbling amid already heightened tensions, Keatinge told the Kyiv Independent.

Fallout

The idea of sanctions was for Ukraine’s allies to work together to hinder Russia’s war economy and punish Moscow for its brutal invasion. Trump’s administration previously floated sanctions relief to bring Moscow to the negotiation table, shortly after former president Joe Biden worked with London to lay down the most extensive sanctions to date in January before Trump’s inauguration.

The growing rift between the U.S. and Europe has increased the risk of Trump acting without Europe. He no longer sees the need to coordinate with European allies and seems uninterested in keeping sanctions in place, said Elisabeth Braw, a senior fellow with the Atlantic Council's Transatlantic Security Initiative.

The fallout from the U.S. unilaterally easing sanctions would cause chaos in the global economy, she said. Companies would have to navigate the complexities of conforming to one set of rules for the U.S. and another for the remaining G7 and EU economies, leading to mountains of paperwork and uncertainty among businesses.

“We have never been in a situation before where one Western ally might act in one way in lifting sanctions and others may act in a different way,” she said.

“Imagine the chaos that would create for companies if within the G7 and the European Union we had essentially contradictory rules when it comes to Russia.”

The U.S. and Russia were never important trading partners, with pre-war trade totaling $6.4 billion in Russian imports and $29.7 billion in American exports in 2021. In purely economic terms, lifting American sanctions wouldn’t lead to massive amounts of cash flowing to Russia’s war machine, but the political messaging would be “catastrophic,” said Jason McCue, senior partner of McCue Jury & Partners LLP, a law firm.

The disunity among Ukraine’s allies would not only be a gift for Russia but would make sanctions harder to sustain. The EU and G7 have already sanctioned “everything that is meaningful,” and further packages cannot counterbalance the loss of the U.S., said Braw.

European countries will face the moral dilemma of easing sanctions to boost Europe’s economy and keep up with American companies or sticking to their guns to punish Putin. Brussels and London would find it hard to lift restrictions as they stipulate that Russia should meet requirements such as compensating Kyiv and respecting Ukraine’s territorial integrity.

But pressure could mount from businesses and pro-Russian leaders like Hungarian Prime Minister Viktor Orban that have long been against sanctions.  

“There will be European corporations that will be trying to take a back channel to get licenses so that they can compete with Americans,” said Keatinge.

If the EU lifts sanctions, it would be a much bigger boost for Russia’s economy. Moscow and Brussels were key trading partners pre-war, with trade reaching 257.5 billion euros in 2021, including over 60% of Russian fuel imports to the EU — Russia’s biggest cash cow.

The question remains if Putin would allow European enterprises to enter Russia again. If the U.S. unilaterally eases sanctions, Putin will have the leverage to turn around and demand more from Europe in return for a place on its market, said Keatinge.

“That would be a huge victory for Putin because he would essentially be marginalizing Europe and doing business with the Americans,” he said.

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America First

Trump can lift some sanctions with a wave of his hand while others will have to go through Congress.

With the U.S. leader embarking on his own negotiations with Russia, sanction relief will likely be a part of a deal cut with Moscow. Following a meeting with Russian Foreign Minister Sergey Lavrov last month, Trump’s administration vocally supported economic opportunities with Russia after the war.

In particular, Trump has eyed Russia’s lucrative mineral deposits, which previously made up a large chunk of Russian exports to the U.S.

“If sanctions were lifted, I suspect it would be more about making money for the United States, giving Putin something that he can talk about, and further wedging between the U.S. and the EU,” said Keatinge.

If Trump does negotiate easing sanctions on Russia, he needs to ensure security guarantees for Ukraine, said Yuliya Ziskina, a senior legal fellow at Razom for Ukraine, a nonprofit. Without them, it would be an “ill-fated strategy,” she said.

“Lifting sanctions against Russia would allow it to rebuild its economy, strengthen its war machine, and reattack Ukraine,” Ziskina told the Kyiv Independent.

Trump is also likely to untie sanctions that would benefit U.S. businesses by arguing that they work against the interests of the U.S. population. In turn, that will bolster Russian businesses and allow them to get hold of dollars via the U.S., overcoming the suspension of U.S. dollar exchange trading on the Moscow Exchange, McCue said.

While lifting sanctions would legally give American companies carte blanche to jump back into the Russian market, Moscow is still battling an overheated economy that will turn many off.

The ruble’s value may have bounced back in recent weeks in line with Trump’s talks on a peace agreement, but the key interest rate remains sky-high at 21%, and growth is predicted to slow to 1.7% this year, down from 4.1% in 2024.

U.S. Companies would also have to battle the lawlessness of Russia, which is dominated by cutthroat oligarchs close to Putin. Nationalization and corporate raids still loom over Western businesses operating in Russia, and that won't disappear anytime soon, said Ziskina.

Many businesses will remain circumspect of the risks and potential global backlash, although some will cautiously wait to see what happens to the first tranche that barrels in, said Braw.

“But to be honest, the kinds of companies we're talking about are not worried about reputational risks,” said Keatinge.

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The Kyiv IndependentAndrea Januta