Diplomacy IS her strong point, after all...

In responding to a question from a reporter regarding his previous very dismissive comments about Senator Clinton's international experience being similar to a series of tea parties, President Elect Obama basically said that what was said during the heat of an election does not matter. Really????

At a morning news conference in Chicago, Obama said his team "must pursue a new strategy that skillfully uses, balances, and integrates all elements of American power: our military and diplomacy, our intelligence and law enforcement, our economy and the power of our moral example.

"The team that we have assembled here today is uniquely suited to do just that," he added as his Cabinet picks stood behind him on a flag-draped stage. "They share my pragmatism about the use of power, and my sense of purpose about America's role as a leader in the world."

Obama named Washington lawyer Eric Holder as attorney general and Arizona Gov. Janet Naploitano as homeland security chief. He also named two senior foreign policy positions outside the Cabinet, including campaign foreign policy adviser Susan Rice as U.N. ambassador.

Obama introduced Clinton first, saying of his former presidential rival, "She possesses an extraordinary intelligence and toughness, and a remarkable work ethic. ... She is an American of tremendous stature who will have my complete confidence, who knows many of the world's leaders, who will command respect in every capital, and who will clearly have the ability to advance our interests around the world."

Clinton will give up her seat as a senator from New York to join the Obama Cabinet. Her appointment was preceded by lengthy negotiations involving her husband, the former president, whose international business connections posed potential conflicts of interest.

The former president also agreed to disclose the donors to the foundation that built his library, as well as contributors to his international foundation.

She said to Obama, in brief turn at the lectern, "I am proud to join you...and may God bless you and our great country."

Sen. Clinton had scarcely finished speaking when her husband issued a written statement.

"She is the right person for the job of helping to restore America's image abroad, end the war in Iraq, advance peace and increase our security, by building a future for our children with more partners and fewer adversaries, one of shared responsibilities and opportunities," he said.

Gates said he was "mindful that we are engaged in two wars and face other serious challenges at home and around the world."

"I must do my duty as they do theirs," he said of the men and women in uniform in Iraq, Afghanistan and elsewhere. "How could I do otherwise?"

He said he was "honored to serve President-elect Obama."

Gates' appointment fulfilled a campaign promise by Obama, the naming of a Republican to his Cabinet.

Obama said Napolitano understands the need to protect against terror attacks and to respond to natural disasters -- and that she also understands as well as anyone the danger of unsecured borders.

Obama now has half of the 15-member Cabinet assembled less than a month after the election, including the most prominent positions at State, Justice, Treasury and Defense. Obama takes office on Jan. 20.

The Associated Press contributed to this report.