UPDATE 4-Obama picks Hagel for defense, Brennan for CIA

* Faces Senate battle on two fronts

* Hagel faces questions on Israel, gays

* Brennan's previous CIA tenure under scrutiny

* Moves fill out reshuffled national security team

By Steve Holland and Roberta Rampton

WASHINGTON, Jan 7 (Reuters) - President Barack Obama on
Monday nominated former Republican Senator Chuck Hagel as his
next defense secretary and counterterrorism adviser John Brennan
to head the CIA, potentially setting up at least one Senate
confirmation battle and establishing a tough tone to start his
second term.

Obama moved ahead with the picks despite concerns raised by
senators on both sides of the aisle about them. Hagel has made
controversial comments about Israel and gays while Brennan faces
questions over his views as a CIA official in the Bush
administration on the use of so-called enhanced interrogation
techniques, widely considered torture, on terrorism suspects.

"I hope that the Senate will act on these confirmations
promptly. When it comes to national security, we don't like to
leave a lot of gaps between the time that one set of leaders
transitions out and another transitions in. So we need to get
moving quickly on this," Obama said in announcing them.

The addition of Hagel and Brennan, along with Democratic
Senator John Kerry as nominee for secretary of state, rounds out
Obama's national security team as he faces daunting challenges
of winding down the war in Afghanistan, dealing with the Iranian
nuclear standoff and curbing military spending.

Hagel, 66, appeared to face the tougher fight for
confirmation in the Democratic-controlled Senate, in spite of
Obama's warm words of praise for the former Nebraska lawmaker as
someone "who bears the scars and the shrapnel from the battles
that he fought" in the Vietnam War.

Some Democratic senators offered only tepid support for
Hagel and many Republicans expressed deep concerns. The
pro-Israel lobby in Washington, which Hagel once criticized, was
gearing up to fight him.

"Chuck Hagel, as a former colleague and a patriot with a
decorated service record, has earned the right to nothing less
than a full and fair process in the Senate. I look forward to
fully studying his record and exploring his views," Democratic
Senator Charles Schumer of New York said.

In an interview published as his nomination was being
announced, Hagel told the Lincoln Journal Star, a Nebraska
newspaper, that critics had "completely distorted" his record
and said there was "not one shred of evidence that I'm

He expressed "unequivocal, total support for Israel" and
backed tough sanctions against Iran over its nuclear program.

Brennan, on the other hand, appeared to be generating less
outright opposition, suggesting a possible easier path to
confirmation. He withdrew his name from consideration for the
top CIA post in 2008 in the face of criticism over comments
suggesting the harsh interrogation methods produced useful
information from detainees.

There is no evidence Brennan was directly involved in the
Bush-era program, which included techniques such as
waterboarding, a form of simulated drowning, and sleep

As White House counterterrorism chief, he was a key player
in the secret operation that led to the death of Osama bin Laden
in 2011, and he has been at the heart of policies dealing with
drone strikes in Yemen, among other issues.


Brennan, 57, would replace disgraced retired General David
Petraeus, who got entangled in a sex scandal as CIA director and
resigned in November after admitting to an affair with his

"Clearly, Mr. Brennan has the qualifications and expertise
to be the next CIA director," said Democratic Senator Dianne
Feinstein, chairwoman of the Senate Intelligence Committee,
which will consider Brennan's nomination. "He has longstanding
knowledge of the operations of this critical agency and also the
strength to see that it follows the law. I believe he will be a
strong and positive director."

Obama's decision to go ahead with the picks made clear he
was ready to fight for his personnel and eager to put behind him
a flap over his preferred choice for secretary of state, U.S.
Ambassador to the United Nations Susan Rice. Rice pulled out of
consideration in the face of criticism over her descriptions of
the deadly attacks on the U.S. diplomatic mission in Benghazi,

Mindful of the concerns about both Hagel and Brennan on
Capitol Hill, Obama spoke at length about each in a White House
ceremony, then turned over the microphone to outgoing Defense
Secretary Leon Panetta and acting CIA Director Mike Morell to
provide testimonials about their chosen replacements.

Panetta, heading home after decades of public service, most
recently as defense secretary and CIA director, expressed
lighthearted exasperation with the partisan divide in
Washington, saying he would go back to his California walnut
farm where he would be "dealing with a different set of nuts."

While senators are normally inclined to give the benefit of
the doubt to someone from their ranks, this has not been the
case with Hagel, a maverick former senator.

As Hagel's name was floated for the post in recent weeks,
many Republicans and some Democrats reacted with alarm,
expressing deep concerns about past statements the moderate
Republican has made. He has offered controversial views on key
U.S. ally Israel, once complaining about the power of "the
Jewish lobby" in Washington and urging direct talks with Iran
over its nuclear ambitions.

Past remarks seen as disparaging to gays have drawn the ire
of gay rights groups. A group called the Log Cabin Republicans
published a full-page ad in The Washington Post that attacked,
for example, Hagel's 1998 opposition to an "openly, aggressively
gay man" to serve as a U.S. ambassador. He has since apologized
for the statement.

Republican Senator Rob Portman of Ohio said he was surprised
and disappointed that Obama had moved ahead with the Hagel

"I don't understand why the administration is looking to
pick yet another political fight instead of working with
Congress to solve some of the very real problems we face as a
country," he said.