PRESS: Japan PM Abe To Keep Some Key Policymakers in Cabinet

     TOKYO (MNI) - Japanese Prime Minister Shinzo Abe on Thursday will reappoint

some close allies in a cabinet reshuffle but also distribute ministerial posts

to various factions in the ruling party in a bid to refresh the image of his

scandal-plagued administration and cement his grip on power.

     Among the key names, Deputy Prime Minister and Finance Minister Taro Aso,

76, will continue to support Abe, 61, in his efforts to overcome deflation and

raise the economy's low growth potential, press reports said.

     Abe will also retain his key alley in the cabinet, Yoshihide Suga, 68, as

chief cabinet secretary, the reports said. As the top government spokesman, Suga

has been defending Abe's economic, legislative and diplomatic polices.

     Both Aso and Suga have been supporting Abe since the nationalist blue-blood

politician led his Liberal Democratic Party to a return to power in a landslide

win in late 2012 Lower House elections with the promise to "regain Japan" by

correcting the high yen, overcoming deflation and conducting more assertive

diplomacy.

     Foreign Minister Fumio Kishida, 60, who has held the post since Abe

returned to power, moved to the LDP leadership team as the chairman of the

Policy Research Council.

     "Abenomics has helped create jobs and raise wages but we still need to seek

a virtuous circle of economic growth and wealth distribution," Kishida told

reporters Thursday as he assumed the senior party post.

     By pursuing Abe's reflationary economic policy mix -- aggressive monetary

easing, increased fiscal spending and structural reforms -- the government will

tackle income inequality and sluggish consumption amid rising corporate profits

and a modest economic recovery, he said.

     Kishida will be replaced by Taro Kono, 54, a liberal lawmaker from a

political family. Kono served as administrative reform minister from 2015 to

2016.

     Initially Abe wanted to keep Kishida, a potential rival for the top party

position, and thus premiership, within the cabinet to maintain his loyalty but

Kishida wanted to gain more experience in ruling party policymaking in

preparation for a future bid for prime minister, press reports said.

     In addition to diplomacy, Kishida temporarily served as defense minister as

Tomomi Inada, Abe's protege, resigned last Friday over a defense ministry

cover-up of daily activity logs on peacekeeping operations in South Sudan,

although she denied that she was directly involved.

     Inada's resignation was widely expected as public support for Abe's cabinet

has continued to slide over its handling of political scandals, casting doubt

over his leadership ahead of parliamentary elections expected next year.

     In another scandal, opposition parties have charged that Abe showed

favoritism to a close friend over plans to open a veterinary faculty in a

special deregulation zone as part of the government's growth strategy.

     Prime Minister Abe's critics have said he has been too arrogant in

policymaking at the national level -- resorting to rushed voting on

controversial security bills -- on the back of the majority the governing

coalition holds in both chambers of parliament. But so far opposition forces in

the Diet have not been able to capitalize on the political scandals that

surround Abe.

     Itsunori Onodera, 57, will lead the defense ministry amid a growing

security threat from North Korea's nuclear ambitions. He held the defense

portfolio for a few years from late 2012.

     Abe will also appoint Seiko Noda, 56, as minister of internal affairs and

communications who is also in charge of empowering women, in a bid to show he is

listening to various opinions in his party.

     Within the LDP, some politicians are opposed to aggressive monetary easing,

which has so far failed to raise inflation to the Bank of Japan's target of 2%.

They have also called for a shift to stricter fiscal discipline, instead of

seeking to create demand through public projects.

     Takeshi Noda, a former LDP tax panel chief who was removed by Abe, is

holding study sessions with other LDP lawmakers including Seiko Noda. They are

discussing an exit strategy for the BOJ's massive asset purchases and the need

to raise the sales tax to finance growing social security needs.

     Ken Satio, 58, will join the cabinet as minister of agriculture, forestry

and fisheries, press reports said. Satio belongs to an LDP faction led by

Shigeru Ishiba, who plans to run in the LDP leadership race in September next

year to challenge Abe's bid for an unprecedented third term as the party chief.

     Hiroshige Seko, 54, will remain as minister of economy, trade and industry.

In the Abe government, he also served as deputy chief cabinet secretary.

     Economic and Fiscal Policy Minister Nobuteru Ishihara, 60, will be replaced

by Toshimitsu Mogi, 61, who was the head of the LDP Policy Research Council

until Thursday.

     Among senior policymakers at the LDP, Toshihiro Nikai was reappointed as

secretary-general, as was Masahiko Komura as deputy party president.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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