Obama names Panetta, Blair as top spymasters

By Randall Mikkelsen

WASHINGTON (Reuters) - President-elect Barack Obama named two intelligence outsiders on Friday as his top spymasters to play a leading role in restoring what he has called a tarnished U.S. image abroad.

Obama nominated Leon Panetta, White House chief of staff to former Democratic President Bill Clinton, as CIA director, and retired Adm. Dennis Blair to oversee all 16 U.S. spy agencies as director of national intelligence.

Panetta and Blair did not come up through the ranks of intelligence agencies, and their nominations reflect Obama's determination to restore a U.S. reputation battered by accusations of torturing suspected terrorists and secret wiretapping of Americans' overseas phone calls.

"To be truly secure we must adhere to our values as vigilantly as we protect our safety, with no exceptions," Obama said in announcing his picks.

"Under my administration the United States does not torture. We will abide by the Geneva Conventions. We will uphold our highest ideals," he said.

Obama pledged to ensure that U.S. intelligence is accurate and untainted by politics, after the spy agencies failed to prevent the September 11 attacks and wrongly concluded that Iraq had weapons of mass destruction.

Obama rounded out the team with current or former intelligence professionals. He saluted the intelligence rank-and-file and stressed a need to defend the country against terrorism and other threats.

"There is no margin for error," he said.