Note: This article is an abridged version of an in-depth report produced by the Legatum Institute and the Institute of Modern Russia, entitled "Looting Ukraine: How East and West Teamed Up to Steal a Country."

The papers are full of how Russia is undermining Ukraine, how it wants to bring its ex-colony to its knees, to bend it to Vladimir Putin's will. But they are only telling part of the story: Ukraine was already on its knees before the war in eastern Ukraine began, and that is as much the fault of the democratic countries in the West as it is of Putin. Britain, Austria, Switzerland, and Delaware, as well as the "sunny places for shady people" that we think of as tax havens, have allowed Ukraine's corrupt leaders to export embezzled money and to enjoy Western property rights for years. Officials looted so much that the country was on the verge of collapse even before Putin annexed Crimea. Ukraine's rulers have had no need to build a stable political system at home, because Western countries have been willing to sell them theirs.

Despite the political will shown at the Asset Recovery Conference in London this year, the chronic failure of Western regulators to investigate, monitor, or sanction the import of corrupt funds has led to a situation in which it is likely to take years, if not decades, to claw back the money stolen by ex-President Viktor Yanukovych and his "family."

When Yanukovych came to power in 2010, Ukraine became a world leader in funneling state resources into Western banks, legal vehicles, and property. Oleh Makhnitsky, who was general prosecutor during the London conference, estimated the loss to the Ukrainian economy during Yanukovych's rule at up to $100 billion.

Bribes flowed upwards in a pyramid structure with officials paying tribute to those above them. At the summit, Yanukovych, his family, and his friends became spectacularly wealthy. His son, Oleksandr, previously an unsuccessful dentist, became one of the wealthiest businessmen in the country.

This erosion of the state from within left Ukraine so weakened that it proved unable to suppress last year's revolution. "When you look at the system, it was stupid," explains Andriy Kutuzov, a Ukrainian lawyer who participated firsthand in taking bribes from clients to judges. "It's like building a house by taking bricks from the foundations and using them for the upper floors."

To extract illegal money from Ukraine, Russia, or anywhere, and transform it into legal money offshore requires ingenuity. In recent years, several Western companies have proved happy to establish the legal vehicles required.

An illustrative example is Astute Partners, through which Yanukovych concealed his ownership of Sukholuchya, his hunting estate. It was a British "shelf" company created in 2004 and kept in readiness by a Trust and Company Service Provider (TCSP). On September 3, 2009, the director and owner of Astute Partners changed from "Nominee Director Ltd" to Reinhard Proksch, a U.S.-trained Austrian lawyer, who concealed the company's true ownership behind attorney-client privilege.

These kinds of structures have several advantages. First, the sheer number of jurisdictions (Ukraine, Britain, Nevis, Austria, Cyprus, Latvia) complicates any potential investigation. Second, the "British" ownership gives both a veneer of respectability and access to British courts.

Corruption under Yanukovych took several forms. The most lucrative was VAT fraud, where bribes are paid to recover VAT refunds from Ukrainian officials who have withheld them, or to allow businessmen to demand refunds of VAT they never actually paid. More sophisticated methods were the embezzlement of money from the $50 billion state procurement budget, or the illegal privatization of state property.

In April 2014, the new head of Ukraine's tax service, Ihor Bilous, estimated that under Yanukovych, VAT fraud alone had cost the country a quarter of its national budget, with the money instead flowing into offshore accounts belonging to corrupt officials.

Large bribes are typically paid directly into an offshore bank account, often in Cyprus. So-called "black financiers" can exchange cash held in Ukraine for money held in an offshore bank account, usually for a 5 percent cut. Cyprus's role as a conduit for money into and out of Ukraine is crucial. It is consistently the single biggest investor in Ukraine (accounting for almost a third of the total sum as of April 1, 2014). Investigators have indicated that most of this is illegal money "round-tripping" back into Ukraine in the guise of legitimate foreign direct investment.

Ordinary Ukrainians are obsessed with recovering the money their former rulers have hidden in the West. Statements on the subject from Western officials have enormous resonance. Expectations are high that the Western authorities will honor their promises and return the money to Ukraine. (In the photo above, protesters wave a placard depicting a corrupt banker during a July protest in Kiev.)

Considering the lengthy legal process that lies ahead, the main problem facing Western officials is managing those expectations. As Vitaliy Shabunin, one of Kiev's foremost campaigners against graft, says: "If the money which was stolen from Ukraine is not returned here, it will be such a massive blow against Euro-integration, it would be like they don't care."

In this context, the potentially overestimated figures given by Ukrainian officials for how much money was stolen from the country are not helpful, since most ordinary Ukrainians expect the return of $30 or $40 billion to be a relatively straightforward affair.

So far, the actual amount of assets frozen has fallen far short of that sum, with Britain freezing just $23 million, Switzerland $193 million, and Austria and Liechtenstein freezing unspecified amounts. The court cases initiated to return the money have barely started, while the owners of the assets -- Yanukovych and allies -- have filed suits of their own to have the freezes cancelled. It promises to be a lengthy legal tussle before any progress is made.

If the West had beforehand applied anti-money laundering regulations as zealously toward post-Soviet kleptocrats as they do toward potential terrorists, then the money would never have come to the West in the first place. This would have undermined the whole system that has maintained chaos and corruption in the former eastern bloc, since people do not steal money if they cannot keep it.

As it stands, Western investigators have shown no interest in investigating proactively, so other kleptocrats have few grounds for concern, and the risk remains that the old system will re-establish itself with Ukraine's new rulers.

"By not acting, the British authorities are giving the green light to money launderers and organized criminals and it's impossible to do anything about it," says Bill Browder, of Hermitage Capital. "There should be repercussions for known money launderers," he continued, "but there are none that we can see in the U.K. The environment here encourages them all the more. There have also not been repercussions in some of the offshore jurisdictions, but you don't expect them to behave, but in the U.K. we would have expected better."

In Britain, the anti-corruption process is led by the Department for International Development, and focuses on countries with which the country has an aid relationship, primarily in sub-Saharan Africa. I could find no ministry, or enforcement agency, prepared to talk to me, even off the record, about the U.K.'s efforts to track down and return Ukrainian money.

The United States government has been better. In 2011, the Justice Department announced the creation of a new Kleptocracy Asset Recovery Initiative to help investigate former officials from the governments being overthrown in the Arab world. The initiative pledged to find assets stolen by corrupt officials and use civil forfeiture law to confiscate them. Although this was very welcome, the United States did nothing specifically for Ukraine.

According to Oleksii Khmara of Transparency International Ukraine, "It is hard to freeze money, and even harder to return it, and it will take two, three, or five years, but people from Ukraine believe that the EU can send this money by the autumn, that they could be getting $5 billion or $10 billion by the autumn."

Western countries won significant goodwill among ordinary Ukrainians thanks to their rhetorical and financial support for the revolution. This pro-Western sentiment is of crucial importance in keeping pressure on Ukraine's new president and his officials, and forcing them to reform the country on a European model.

That goodwill cannot last forever. The West will have to take substantial steps to assist Ukraine in overcoming the many obstacles on the path to a more honest future.

Yanukovych's use of Western money-laundering vehicles is well known in Ukraine, as is the fact that Western countries took no effective steps to stop this while Yanukovych was in power. If those countries do not help put an end to the system now, Ukrainians will begin to believe that their admiration for the West is misguided.

Anyone who wishes to see Ukraine join Europe rather than slide back into Moscow's embrace must be prepared to help Ukraine break its post-Soviet habits. The most effective form of help would be to block the institutional pipelines that sucked money out of Ukraine and pumped it westward. This would deprive corrupt Ukrainian officials of the ability to hide their ill-gotten gains, as well as strengthen the Ukrainian state and empower its citizens.

Western money-laundering and offshore operations supported Yanukovych and continue to support Putin, and thus maintain regimes inimical to the values that Western governments profess to hold. If cynicism spreads among Ukrainians and they conclude that the West and Russia are as bad as each other -- and that, in essence, Westerners say pretty things but in reality care only for money -- then the revolution will fail.

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