Ex-finance chief: Russian budget is overextended

MOSCOW (AP) — The influential Russian finance minister who was ousted by President Dmitry Medvedev warned on Tuesday that Russia's budget is overextended because of increased spending on defense and social needs.

Alexei Kudrin was forced out Monday after a public spat with Medvedev over the finance minister's statement that he would refuse to serve in the government if Medvedev became prime minister.

Medvedev and Prime Minister Vladimir Putin announced over the weekend that they intended to swap jobs next year. Many suspect Kudrin had hoped to be named prime minister under Putin.

In his first comments since the ouster, Kudrin, who has been Russia's finance minister since 2000, said his statement about not wanting to serve in a Medvedev government was "well thought out and well founded."

"For the past several months, despite my numerous objections, some of them made publicly, decisions were taken on budget policies that without doubt have increased budget risks," he said in a statement. "And budget risks are connected first of all with excessive commitments in the defense sector and social sector that will inevitably affect the entire national economy."

Medvedev had decided to raise military spending by 1.3 percent of Russia's gross domestic product. The spending hike, however, was likely sanctioned by Putin.

Kudrin said he had discussed his desire to resign in February with Putin, who asked him to stay on because of the challenges of managing the budget during an election campaign. Russia holds parliamentary elections in December and a presidential election in March.

Putin appointed one of Kudrin's deputies, Anton Siluanov, to serve as acting finance minister, while one of Putin's deputies, Igor Shuvalov, will oversee financial and economic issues in the government. Kudrin had held both posts: finance minister and deputy prime minister.

Standard & Poor's said Kudrin's departure and the impending job switch between Medvedev and Putin would have no immediate impact on Russia's economic policies or its debt rating.

Investors and analysts, however, warned it would be hard to find a replacement who would be as effective in vehemently opposing populist spending, especially in an election year.

A darling of investors and post-Soviet Russia's longest-serving finance minister, Kudrin was widely credited with softening the blow of the 2008-2009 global downturn in Russia with his conservative fiscal policies. During Putin's presidency from 2000 to 2008, Kudrin set up a rainy day fund to stash away some of the revenue from Russia's oil exports. The idea angered many in the government who sought higher spending, but ultimately proved to be an invaluable cushion.

S&P said the recent days' events would be unlikely to result in a "significant departure from current economic and fiscal policies." The agency said it expects "Russian state capitalism and the close links between politics and business to remain unchanged."

The agency, however, voiced concern that a government reshuffle could make it difficult for Russia to "consolidate public finances" and boost long-term growth by "improving the business environment, competition, and the productive infrastructure."

Some analysts said the decision to sack him would reflect badly on Medvedev.

Vladimir Milov, former deputy energy minister and opposition figure, wrote in the Moskovskiye Novosti paper that "the firing of an efficient finance minister in a grave financial and economic situation and with the authorities' obvious inability to reverse it is an unexplainable decision."

Ovanes Oganisyan, vice president at the Moscow-based investment bank Renaissance Capital, said in a note to investors that "the bench is quite short" for Kudrin's long-term replacement.

He said the finance minister's position will be key in the new government "considering the fiscal challenges that Russia may be facing in upcoming years, including a weak economic growth environment and growing budget deficits."

Russia markets, buoyed by higher oil prices and surging stocks worldwide, seemingly paid no heed to Kudrin's resignation. The MICEX benchmark index was up 2.4 percent and the ruble gained 1.3 percent against the dollar.

Typhoon rains flood Philippine capital, kill 16

MANILA, Philippines (AP) — Manila residents waded through waist-deep floodwaters and dodged flying debris Tuesday as a powerful typhoon struck the Philippines, killing at least 16 people and sending waves as tall as palm trees crashing over seawalls.

Most deaths occurred in metropolitan Manila, which already was soaked by heavy monsoon rains ahead of Typhoon Nesat's arrival with more downpours and wind gusts of up to 93 mph (150 kph). Downtown areas along Manila Bay suffered their worst flooding in decades.

Pounding rains obscured the view of anyone on the streets as soldiers and police scrambled to safely evacuate thousands of people in low-lying areas, where rivers and the sea spilled into shanties, hospitals, swanky hotels and even the seaside U.S. Embassy compound.

"It's flooded everywhere. We don't have a place to go for shelter. Even my motorcycle got filled with water," said motorist Ray Gonzales, one of thousands stranded by fast-rising floodwaters.

The massive flooding came exactly a day after this sprawling, coastal city of 12 million held two-year commemorations for the nearly 500 people killed during a 2009 cyclone, which dumped a month's rainfall in just 12 hours. The geography of the archipelago makes it a welcome mat for about 20 storms and typhoons from the Pacific each year.

Some residents acted more quickly this time to evacuate homes as waters rose, including in the Manila suburb of Marikina where 2,000 people escaped the swelling river by flocking to an elementary school, carrying pets, TV sets, bags of clothes and bottled water.

"We can replace things, but not people's lives," said janitor Banny Domanais, arriving at the school with his wife and three young daughters.

Typhoon Nesat hit ashore before dawn Tuesday in eastern provinces and headed inland just north of Manila with up to an inch of rain per hour, half that of the storm two years ago, said government forecaster Samuel Duran.

Emergency workers evacuated river areas in Manila that are notorious for flooding. In all, authorities ordered more than 100,000 people across the country to shelter from the storm's sustained winds of up to 75 mph (120 kph) and its rains — dropping from an immense 400-mile (650-kilometer) cloud band.

Along downtown Manila's historic baywalk, cars and buses were stuck and residents struggled through floodwaters as waves washed over the seawall, turning a six-lane highway into a huge brown river. Sidewalks and buildings entrances were swamped.

In the financial district of Makati, a billboard fell on two cars and a bus, causing injuries.

Neck-deep waters on the ground floor of the Manila Hospital forced staff to move patients to higher floors and flooded generators left the facility without power, spokeswoman Evangeline Morales said.

Soldiers and police in trucks moved thousands of residents, mostly women and children, from the Baseco shanty facing Manila port after many houses were washed away. Male family members were reluctant to leave, saying they wanted to guard their property.

The Philippine Stock Exchange and U.S. Embassy were closed.

Waters at the gates of the embassy compound reached chest-deep, and staff were told to stay home, spokeswoman Tina Malone said.

"There was some flooding in the embassy. I don't know the extent. I'm not there right now," Malone said.

The Sofitel Philippine Plaza relocated its guests after flooding damaged areas of the high-end hotel on the shores of Manila Bay. Sirinate Meenakul, the hotel's regional communications director, said no guests or staff were injured. She did not say how many guests were there.

Benito Ramos, a retired army general who heads the Office of Civil Defense, said authorities were still assessing the damage as the typhoon continued to pummel some areas of the country. He said it was heartwarming to see Filipinos remaining calm amid the unfolding crisis.

"We see people on the roofs of their houses drinking gin and smiling and waving," Ramos said. "Such resiliency helps them get by in stressful times."

Seasonal monsoon rains ahead of the typhoon plus winds pushing seawater inland had worsened the situation, forecaster Duran told the AP. "Land is saturated with rain so the next rain became run-off and was already floodwater," he said.

The wind sent storm surges over an embankment that then trapped water on the city side so that it "couldn't flow back to the bay," said Francis Tolentino, chairman of Metro Manila Development Authority.

President Benigno Aquino III, on a state visit to Japan, told Associated Press Television News he was confident that authorities were adequately responding to flooding. He said he believed power would be restored to most of the Philippine capital by Tuesday afternoon.

However, most of downtown was in darkness as night fell and cellphone coverage was interrupted.

He said in an earlier statement that the government had carried out preventive evacuations, and that nearly half of the Luzon areas served by the main power distributor were without electricity due to short circuits caused by high winds.

The first reported death was a 1-year-old boy who drowned in the central island province of Catanduanes after falling into a creek, the government disaster agency reported. As the typhoon's winds lashed metropolitan Manila, a mother and child were killed when their house was hit by a falling tree, and four were reported killed by a collapsing wall.

Two others drowned, while a man was buried in a landslide in Olongapo west of Manila and another died in traffic collision. Four girls and a baby were pinned to death by falling trees north of Manila, and three more children were missing.

Four people were unaccounted for in a landslide in mountainous Ifugao province, as were four fishermen while more than 50 others were rescued along eastern shores after their boats overturned in choppy seas. Forecasters warned of 12-foot-high (4-meter-high) waves.

The storm was expected to leave the Philippines late Tuesday and head into the South China Sea toward southern China.

7-year sentence sought for Ukraine's Tymoshenko

KIEV, Ukraine (AP) — A spokeswoman for former Ukrainian Prime Minister Yulia Tymoshenko says prosecutors have asked the judge in her abuse-of-office trial to sentence her to seven years in prison.

The spokeswoman, Natasha Lysova, says prosecutor Liliya Frolova also asked the judge on Tuesday to fine the country's top opposition leader 1.5 billion hryvna ($190,000 or €140,000) for the alleged damages she caused and to make her ineligible to occupy government posts for three years.

Prosecutors could not immediately be reached for comment.

Tymoshenko stands accused of exceeding her authority when signing a gas import contract with Russia in 2009.

She says the trial is an effort by Ukrainian President Viktor Yanukovych to bar her from upcoming elections.