EDITORIAL

Russian fallout

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Fallout from Russia's annexation of the Crimea region of Ukraine already is affecting the auto industry in Europe. And the situation could get worse quickly.

Both Russia and Ukraine have amassed forces along their borders. Russian-speaking protestors seized buildings in several eastern Ukraine cities, expanding the scope of conflict. With no viable military option as Russia seized control of Crimea, Western powers imposed measured economic sanctions.

The sanctions have taken the air out of a struggling Russian market, where auto sales fell 5 percent last year. Citing Crimea, IHS Automotive revised its 2014 Russia forecast downward from a 3 percent decline in sales to a 7 percent decline.

The Russian ruble has fallen. Foreign investors are halting all Russian projects, The Moscow Times reported. Russia's own agencies slashed this year's economic growth forecast. Russian legislators have drafted bills that if enacted would authorize confiscation of the assets and bank accounts of U.S. and European companies in Russia if Western sanctions are not lifted.

A plunging Russian market hurts European automakers just starting to rebound after six straight years of sales declines.

Global automakers, which previously had announced plans for $10 billion in Russian production investments through 2020, have limited leverage against geopolitical maneuvering.

But they need to muster whatever they can to remind both sides of the economic costs, short and long term.

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