The Obama transition team's long delay in selecting CIA and national intelligence directors is a reflection of the complicated demands of the jobs and Obama's own policies and priorities.
Obama is sending an unequivocal message that controversial administration policies approving harsh interrogations, waterboarding and extraordinary renditions - the secret transfer of prisoners to other governments with a history of torture - and warrantless wiretapping are over, said several officials.
The search for Obama's new CIA chief had been stalled since November, when John Brennan, Obama's transition intelligence adviser, abruptly withdrew his name from consideration. Brennan said his potential nomination had sparked outrage among civil rights and human rights groups, who argued that he had not been outspoken enough in his condemnation of President George W. Bush's policies.
And despite an internal list of former and current CIA officials who had impressive administrative credentials, all either worked in intelligence during the Bush administration's development of controversial policies on interrogation and torture or earlier, during the months leading up to the Sept. 11 terror attacks.
Neither Panetta nor Blair are tainted by associations with Bush administration policies, in large part because they both come from outside the intelligence world. Blair was posted at the CIA for about a year.
Panetta could face tough questions at his nomination hearing about his background in intelligence. California Sen. Dianne Feinstein, who will chair the Senate Intelligence Committee, said Monday she was surprised by the pick, and neither was informed nor consulted.
"I know nothing about this, other than what I've read," she said. "My position has consistently been that I believe the agency is best served by having an intelligence professional in charge at this time."
A former senior CIA official who advises Obama defended the surprise choice of Panetta, who has no direct intelligence experience beyond a two-year stint in the mid-1960s as a U.S. Army lieutenant. The official said Panetta had been a consumer of CIA intelligence when he was at the White House. He said he was selected for his administrative, management and political skills which will allow him both to control and advocate for the agency.
He said Panetta will rely on the expertise of CIA officers to balance his lack of personal intelligence experience.
Veterans of the CIA were caught off guard by the selection.
"I'm at a loss," said Robert Grenier, a former director of the CIA's counterterrorism center and 27-year veteran of the agency who now is managing director of Kroll, a security consulting company.
The lack of intelligence experience puts Panetta at "a tremendous disadvantage," Grenier told The Associated Press in an interview.
"Intelligence by its very nature is an esoteric world. And right now the agency is confronted with numerous pressing challenges overseas, and to have no background is a serious deficit. I don't say that he can't succeed. It may that he can compensate for the obvious deficit."
John Hamre, the president of the Center for Strategic and International Studies, served with Panetta during the Clinton administration. He said Panetta's experience as a former Cabinet member will help elevate the CIA's status inside the White House. The CIA director was once the president's main intelligence adviser. That role shifted in 2004 to the newly created national intelligence director.
Obama "has drawn a former Cabinet-level official to take a sub-Cabinet position, which means for a much more powerful CIA in the constellation of intelligence agencies," Hamre said.
Panetta was director of the Office of Management and Budget and a longtime congressman from California. As White House Chief of Staff during the Clinton administration, he spearheaded the internal effort to find a new CIA chief that led to the selection of John Deutsch in 1995. Deutsch served for 18 months. After he resigned, CIA security officers found classified material on his home computer, a violation of security procedures.
Panetta also served on the Iraq Study Group, a bipartisan panel that released a report at the end of 2006 with dozens of recommendations for reversing course in the war.
With his wife, Sylvia, Panetta directs the Leon & Sylvia Panetta Institute for Public Policy, based at California State University, Monterey Bay. The university that he helped establish is on the site of the former U.S. Army base at Fort Ord. Panetta also served for two years on a review board that helped oversee two major reports on the history of sex abuse in U.S. Catholic dioceses.
Obama's selection of Blair, a former U.S. Pacific Command chief, had been expected.
Blair served in the Navy for 34 years and was chief of the U.S. Pacific Command during the Sept. 11 attacks. Blair also is a China expert, and he was an associate director for military support at the CIA.
Blair and Panetta would replace retired Adm. Mike McConnell and former Air Force Gen. Michael Hayden, respectively. Both men had said they would stay in their positions if asked.