TOKYO (BLOOMBERG) - Japanese Prime Minister Shinzo Abe's long-serving foreign minister left the cabinet on Thursday (Aug 3), a step that frees him to prepare a run for leadership of the ruling party.
Mr Fumio Kishida was appointed chairman of the Liberal Democratic Party's (LDP) Policy Research Council.
Mr Abe is reshuffling his ministers and party officials after a slump in popularity and a humiliating local election defeat. His struggles have increased tensions between the LDP's factions, one of which is headed by Mr Kishida.
It is unclear if Mr Abe sought to have Mr Kishida stay on.
Speaking to reporters after the change was announced, Mr Kishida did not address that question, speaking instead about issues including the economy.
Mr Abe will reveal his new ministerial line-up later on Thursday.
"Usually, people who want to aim for the leadership don't take cabinet jobs," said senior research fellow Tsuneo Watanabe at the Sasakawa Peace Foundation in Tokyo. "Mr Kishida's staying out so that he can launch a challenge."
Allegations of cronyism have undermined public trust in Mr Abe, while a series of scandals and gaffes have focused criticism on his ministers. His falling support does not necessarily put his job in immediate danger, though a recent poll indicated that voters no longer see him as the most appropriate person to lead the government.
"At this point, the people are taking a harsh view of the Abe administration and of the LDP," Mr Abe told party members on Thursday.
"I am reflecting deeply on having brought that situation on," he said. "We will win back the people's trust by renewing our determination and achieving results."
Until recently thought to be guaranteed a third straight term as party leader, Mr Abe is increasingly likely to face a rival or rivals in an election for party president expected in September next year.
Mr Abe's woes come as his government faces several offshore challenges: North Korea has tested two intercontinental ballistic missiles (ICBM) within a matter of weeks, despite international sanctions against the regime, and Japan must navigate the economic protectionism of United States President Donald Trump's administration.
Mr Kishida is seen as less hawkish than Mr Abe on defence, telling reporters on Thursday that his caution on changing pacifist Article 9 of the constitution had not changed.
Mr Abe is seeking to revise the US-drafted document by 2020 to make clear the legitimacy of the armed forces.
Having served as Mr Abe's foreign minister since 2012, Mr Kishida has said little in public about economic policy. Nevertheless, with the LDP divided over how to tackle Japan's ballooning debt and the best path for monetary policy, a leadership battle would raise doubts among investors.
While Japan's economy is heading for a sixth-straight quarter of growth, and unemployment is at its lowest levels since the 1990s, inflation has stalled at 0.4 per cent, far from the central bank's two percent target.
The reshuffle may not succeed in bolstering voter support, according to political science professor Koichi Nakano at Sophia University in Tokyo. "He'll be trying to regain his authority by turning a new page and getting rid of the problematic ministers. But he is also the source of the problem in many ways and he can't get rid of himself."
A general election does not need to be held until the end of 2018, but some analysts have speculated that Mr Abe will opt to call a poll this year to seek a fresh mandate. While his popularity has fallen, the opposition Democratic Party is also struggling, casting about for a new leader to bolster its support beyond single figures.
With a party founded by Tokyo Governor Yuriko Koike yet to make significant inroads on the national stage, the LDP would face minimal opposition.
Ms Koike evicted the LDP from power in the Tokyo assembly in an election last month.