Obama mulls Clinton, Gates as cabinet fills out

A frenzy of speculation has surrounded his former party rival’s selection as secretary of state as Obama assembles a "team of rivals" that looks set also to retain Robert Gates as secretary of defense.

Transition sources are not naming any names but hint at a progressive rollout of cabinet officers, starting as early as Monday with another Obama news conference, after last weeks announcement of the core economic lineup.

"Previously the national security cluster came first but there’s been a minor concession to the economic needs and priorities of the moment," Brookings Institution analyst and veteran White House adviser Stephen Hess said.

However, the security challenge facing the next president has been underlined by the carnage in India after gunmen massacred up to 155 people, including at least five Americans, in Mumbai.

"These terrorists who targeted innocent civilians will not defeat India’s great democracy, nor shake the will of a global coalition to defeat them," Obama said in a statement Friday.

"The United States must stand with India and all nations and people who are committed to destroying terrorist networks, and defeating their hate-filled ideology."

Nine of the gunmen were confirmed dead and one captured. Indian intelligence sources said the detained militant had confessed to coming from Pakistan -- where Obama has vowed a stepped-up offensive on Islamic extremists.

On Tuesday, the president-elect is scheduled to address a meeting of U.S. governors in Philadelphia to hear first-hand about the financial crisis plaguing state authorities, as the global credit crunch bites.

It will be only his second post-election trip outside of Chicago, where Obama has been crafting an ambitious agenda of economic revival, following White House talks with President George W. Bush on Nov. 11.

Questions over former president Bill Clinton’s myriad financial and political dealings have reportedly been resolved to clear the way for his wife Hillary’s appointment as the face of US diplomacy.

The New York Times said Sunday that former president Bill Clinton had agreed to publicly disclose the names of more than 200,000 donors to his foundation as part of an accord with Obama that would clear the way for Hillary Clinton to become secretary of state.

Obama plans to announce Clinton’s nomination on Monday, the paper said.

Meanwhile the retention of Gates is a "done deal," according to ABC News, meaning the current Pentagon chief will pivot from orchestrating the war in Iraq to overseeing its winding down under an Obama administration.

Keeping Gates would undermine Obama’s mantra of change as he bids to turn a page on the unpopular Bush policies.

But it would make good on the president-elects pledge to appoint at least one Republican to his cabinet and drain the rancor from Washington’s partisan swamp.

However, Gates may only be a stop-gap. Several reports said he would step down after a year, possibly to make way for former navy secretary and Obama military adviser Richard Danzig.

Former NATO commander General James Jones is said meanwhile to be in line to become national security adviser.

Jones is respected on Capitol Hill and across the political aisle, and may be particularly sought by Obama for his expertise on the Afghan war, which the president-elect has vowed to make a top priority.

Other appointments mooted in the press include retired Admiral Dennis Blair as director of national intelligence and Susan Rice, a senior foreign policy adviser to Obama, as U.S. ambassador to the United Nations.

Politico.com said former deputy national security adviser James Steinberg would be named Clintons deputy secretary of state, a possible sign that Obama wants to keep a close ally standing watch over his former rival.

The president-elect is not interested in working with "potted plants," according to incoming White House adviser David Axelrod.

"The one thing that Ive learned over six years with Barack Obama is that he invites strong personalities around him," Obamas campaign strategist told Fox News last week.

But Axelrod added: "There’s one person who’s going to set policy in this administration, and that’s the president of the United States. That’s true on the economy. Its true in foreign policy."