By Esq., James S. Henry. This article was first published on The American Interest.

Follow the money. It shows the way that European financial institutions see their interests regarding Russia and Ukraine.

Since the Russian invasion and annexation of Crimea, several commentators have suggested that the anemic character of the European response owes something to the political influence of financial institutions in those countries with a lot to lose should EU governments, whether together with the U.S. government or separate from it, seek to sanction Russia. Nicholas Shaxson made that case in this space recently, specifically with regard to the United Kingdom.

Similar observations now pertain to prospective Western responses to further Russian “incursions” into Ukrainian territory, or, for that matter, into Moldova and possibly even other countries. Unfortunately, these observations have usually lacked specific numbers to give a sense of concreteness to the speculations. They have also often failed to point out the role played not only by Russia as a creditor (both above and below the line of legal sight), but also the role played by the indebtedness of Ukraine and most of its neighbors.

The fact is that both the Russian supply of capital to European banks and the indebtedness of Ukraine and most of its neighbors to those same banks figure in the way that European financial institutions see their interests. European banks made huge amounts of money being the commission-collecting go-between between Russian money fleeing Russia—both above board and through secrecy shenanigans—and ending up as East European debt (some of it borrowed to pay inflated prices for Russian energy supplies).

Does this lucrative money-go-‘round really constrain EU statesmen (such as they are)? Is it fair to claim that these banks make foreign policy, and make it largely as they please? Is it true that while some rant at Obama, the real knuckleheads are bankers in Vienna, Milan and Frankfurt for making their governmental counterparts hostage to their own avarice?

As of 2013, Russia’s net lending to EU banks—taking into account its $538 billion of official foreign reserves and its $875 billion of private “flight wealth”, at least half of which is in liquid assets, and netting out its $242 billion of foreign loans and $180 billion of “contingent claims”—amounts to a $990 billion to $1.1 trillion deposit/loan, depending on whether we include the “contingent claims” as real debt. This compares with total foreign bank claims reported by all EU banks reported by their countries to the Bank for International Settlements of $10.5 trillion. If claims are included, the denominator expands to 16.7 trillion and Russia’s share drops to 6%. But these contingent claims don’t really represent actual cash—they may never happen. So I prefer the “loan measures” of net debt for our purposes here, which is to look at real exposure.)

Either way, Russian capital, public and private, is in effect financing at least 6 percent to 11 percent of all European bank lending.

The Ukraine and its non-Russian neighbors, on the other hand, are net borrowers from the EU banks even after taking into account their flight capital. Austrian, Italian, Greek, Portuguese, and, indirectly, German banks are the biggest bag holders. Given the EU’s shaky post-recession recovery, the fact that Austria’s banks have sunk 35% of their international loan portfolio into this miasma—and Italy 27%; Greece 20%; Portugal 18%—is reason for regret.

The takeaway is this: the Ukraine bloc owes the EU banks anywhere from $540 to $760 billion, depending on how you measure it. And the EU banks and large parts of its economy as a whole financed this loan by essentially borrowing all of it from Russia. If the West tried to clamp down on or seize Russian official assets or private flight capital, or if it otherwise took actions that destabilized the ability of these countries to service their debts, the losers would be in Kiev, Vienna, Milan, and Frankfurt—and not in Moscow.

Now let’s hear the numbers talk in more detail (click to enlarge):