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WASHINGTON (Reuters) - U.S. Defense Secretary Robert Gates has agreed to stay on under President-elect Barack Obama and retired Marine Gen. James Jones will be named national security adviser, the Politico news Web site said on Tuesday.
Politico, quoting officials in both the Democratic and Republican parties, said the announcements would be made early next week when Obama unveils his national security team including New York Sen. Hillary Clinton as nominee for secretary of state.
The Web site said Democrats familiar with the transition plans expected James Steinberg, a former deputy national security adviser in the Clinton administration, to be named deputy secretary of state.
Officials at Obama's transition office had no immediate comment on the report.
It was unclear whether negotiations between Obama and Gates had produced a final agreement, with some sources saying there were still outstanding issues to be settled.
A senior Democratic source told Reuters that Obama intends to ask Gates to remain and that Gates was likely to do so. But the source said Gates was still discussing which of his team he would keep in place under the Obama administration.
A second source knowledgeable about the defense transition also said he did not believe Gates' future was set.
"There's an 85 percent chance he's going to stay," said the source, who spoke on condition of anonymity because no formal announcement had been made.
The source said Gates would be unlikely to remain in the job for less than a year but was concerned about becoming a "lame duck" defense chief if a timetable were placed on his stay.
"There are also issues about who he can keep on his staff and who his deputy's going to be. There are a lot of Democrats who want to assume senior positions at the Pentagon and don't want to be left out in the cold," the source said.
Susan Rice, another of Obama's inner circle of foreign policy advisers, was expected to be named U.S. ambassador to the United Nations and retired Navy Adm. Dennis Blair would be named director of national intelligence, Politico said.
Other news outlets including ABC and Fox also reported that Gates would stay on at the Pentagon, which had been widely suggested as a possibility.
A former CIA director, Gates was president of Texas A&M University when President George W. Bush asked him to take over the U.S. Department of Defense from the combative Donald Rumsfeld in late 2006.
Gates, now 65, set about putting things back on an even keel with a low-key approach that sought to build constructive relationships but also betrayed a steely firmness of purpose in the two U.S. wars in Iraq and Afghanistan.
Jones, a former Marine commandant and leader of U.S. and NATO forces in Europe, had also been seen as among the front-runners for the national security adviser role.
Jones is known to have been a strong critic of the Bush administration's handling of the Iraq war.
In Washington Post journalist Bob Woodward's 2006 book "State of Denial," Jones is quoted as describing the Iraq war as a "debacle."
Obama this week unveiled a string of senior appointments in his economic team, including New York Federal Reserve President Timothy Geithner as Treasury secretary and Lawrence Summers, a Treasury secretary under former President Bill Clinton, as head of the National Economic Council.