Speaking of Blair’s replacement, Feinstein doesn’t come out and say it, but her statement gives a cold shoulder to James Clapper, the Pentagon’s intelligence chief and Blair’s deputy for Defense intelligence, who’s reportedly the leading candidate for the job. “It will be important that any nominee is not beholden to the Pentagon’s interests and can, as needed, provide balance to civilian and military interests in carrying out the nation’s intelligence missions,” Feinstein said in the statement.

No one agency, particularly the Department of Defense, should control the flow of intelligence to the President. The majority of the intelligence budget is already executed by the Department of Defense, and it will always have a strong influence over the Intelligence Community’s operation. That should be balanced, however, by the need for the community to provide strategic intelligence beyond what is necessary for the warfighter.

On the one hand, Feinstein also opposed Leon Panetta’s appointment as CIA director until she got an assurance — in the form of Steve Kappes staying on as deputy director (he recently announced his retirement) — that Panetta wouldn’t jeopardize her prerogatives. On the other, Feinstein didn’t announce any opposition before Panetta’s nomination was announced.

No one should labor under the misconception that Kappes is the linchpin of the drone-strike effort, which has many authors and advocates and structural factors pushing it forward. (Simply put, it’s what you do when you perceive a terrorist threat in a place you can’t invade.) But now that Kappes is out and his replacement is a longtime CIA analyst, not an operative, named Michael Morrell, it’s an open question whether Panetta and Morrell will shift the agency’s focus at all. The smart early money is probably not, since Panetta believes the strikes to be a smashing success. But watch his next round of congressional testimony to see if any post-Kappes shift is underway.

While a statement released by Panetta portrayed Kappes as planning on stepping down “a few months ago,” the deputy director came under withering attack in a new Washingtonian profile by Jeff Stein for being complicit in the agency’s torture programs during the Bush administration. Further underscoring the perception that that’s why Kappes is stepping down is his replacement: Michael Morell, a veteran not of the agency’s operations directorate — where anyone involved in torture would have worked, if not in the director’s office — but the intelligence analysis directorate.

Panetta’s full statement is after the jump.

When I came to the CIA in February of 2009, I was extremely pleased that Steve Kappes agreed to stay on as my Deputy. He was a great partner and I, like so many others, valued his advice and experience. Steve is a one-of-a-kind professional who has dedicated himself to the CIA. He has helped me tremendously in guiding this great organization. Having worked side-by-side on some of the toughest issues around, I’m proud to call him a friend.

Throughout his life, Steve has put the needs of others first, as he did in returning to the CIA in the summer of 2006. He hadn’t planned on so lengthy a stay this time around. So when he told me a few months ago that it was time for him to move on, I understood. Steve has, to put it simply, more than met the highest standards of duty to the nation. He excels at what he does, because he embodies the very best of this outfit—skill and loyalty, dedication and discipline, integrity and candor. He also has, if you know him, one hell of a sense of humor.

After a superb career of public service that stretches back to the mid-1970s, when Steve was in the United States Marine Corps, he deserves the gratitude of his colleagues and his country. As he prepares to retire in May, I know I speak for every one of you when I wish him and his family all the good things.

It was, of course, crucial to both of us that we find an outstanding successor. Today, as we celebrate the achievements of one extraordinary public servant, I am announcing the promotion of another. I have asked Michael Morell, a 30-year veteran of the Agency, to become our next Deputy Director. Michael, as many of you know, has spent much of his career in the Directorate of Intelligence, most recently as its chief. He has also been a Presidential briefer, and was, from July 2006 until May 2008, CIA’s Associate Deputy Director. His focus in that assignment was the administration of the Agency as a whole, assisting and advising the Director on key policy and personnel matters.

Michael has been part of the senior team for almost four years now. He knows the CIA from top to bottom. He understands intelligence as few others do—from collection and analysis to interaction with our customers. Michael has not only seen how the pieces fit together, he’s actually brought them together. He comes to his newest task with a powerful intellect, proven leadership skills, and a deep familiarity with the ways of Washington and the world at large. Michael is someone who builds and improves, someone who takes great pride in the men and women who make this Agency the finest it can be.

Once Michael assumes his new duties, Fran Moore, Deputy Director for Intelligence, will move up to become Director for Intelligence. Fran has been in the Directorate of Intelligence front office since August 2008. She joined the Agency in 1983, and has held leadership positions in several Directorates, shaping our efforts in counterterrorism and counterintelligence, among other disciplines. She doesn’t just tell you what she knows—she tells you how she knows it, how confident she is about it, and what we still need to learn. Fran is the consummate analyst and leader of analysts, insisting on absolute rigor while looking out for the people who do the work.

Three months ago, I named Stephanie O’Sullivan as our new Associate Deputy Director. After leading the Directorate of Science and Technology for more than four years, she has settled into her role as supervisor of the day-to-day operations of our vital and complex Agency. She is an exceptionally creative manager and problem solver. Stephanie blends clear, common-sense thinking with a profound respect for those around her. I rely on her counsel and trust in her judgment.

You’ve heard me say it before, but it’s a message worth repeating: It is a real privilege for me to be your Director. As someone who’s been around this town for 40 years, and has had some great jobs, I’ll tell you that there is no more important mission than the one we share. More than anything else, it’s the people here who make it that way—people like you, and people like those I’ve talked about in this note. I am extremely proud of all of you, and particularly proud of those we honor today. There is no better team to do the job of protecting the nation.

Please join me in congratulating our colleagues on these new chapters in their lives.

Leon E. Panetta

Update: Here’s Feinstein’s statement:

“I deeply appreciate the service that Stephen Kappes has given to the CIA and to the United States over the course of his long career. I was very supportive of his decision to remain as Deputy Director in the transition between the Bush and Obama Administrations, and he has maintained stability at the Agency and been a great help and resource for Director Panetta over the past year. I wish Mr. Kappes the best in the next stage of his career.

“I also look forward to working more closely with Michael Morell, the new CIA Deputy Director. Mr. Morell is a 30-year veteran of the CIA and has served in the past decade in a senior position overseas, in the Agency’s top internal management position, as the President’s intelligence briefer, and as the Deputy Director for Intelligence.”

And here’s Rep. Silvestre Reyes (D-Tex.), Feinstein’s counterpart on the House intelligence committee:

“I want to extend my congratulations to Mike Morell for his selection to serve as the next Deputy Director of the Central Intelligence Agency. I have had the pleasure of knowing Mike and, for the past nine years I have worked with him on a broad range of subjects. He is an exemplary CIA officer.

“Throughout his 30-year career with the agency, Mike has served with distinction. Whether serving at the Director’s right hand, leading the agency’s team of analysts, or serving as the principal briefer to the President, Mike’s diligence and commitment to duty, and to his country, will serve him well as he assumes his new role.

“I know the agency appreciates the job Steve Kappes has done for the nation during his tenure. I will miss Steve’s insight and candor, and I wish him all the best as he moves on to his post-agency career.

“As Mike takes over for Steve, I look forward to working with him to provide the necessary tools for the agency to perform the critical mission of protecting our great country.”

According to an internal investigation, [Kappes] helped tailor the agency’s paper trail regarding the death of a detainee at a secret CIA interrogation facility in Afghanistan, known internally as the Salt Pit.

The detainee froze to death after being doused with water, stripped naked, and left alone overnight, according to reports in the Washington Post and Los Angeles Times. He was secretly buried and his death kept “off-the-books,” the Post said.

According to two former officials who read a CIA inspector general’s report on the incident, Kappes coached the base chief—whose identity is being withheld at the request of the CIA—on how to respond to the agency’s investigators. They would report it as an accident.

A CIA spokesman vigorously denied all aspects of that account to Stein, whose sources stand by it. I am filing a Freedom of Information Act request this morning for the CIA inspector general’s report allegedly implicating Kappes in the Salt Pit death.

“They said that they had produced valuable intelligence,” Smith said. “We took them at their word.” But the group’s consensus was that “whatever utility it had at the outset . . . the secret prisons and enhanced techniques were no longer playing a useful role — the costs outweighed the gains.” He said those costs included obvious damage to the nation’s values and identity, and problems with U.S. allies that strongly opposed the use of such methods.

Boren, who chaired the Senate intelligence committee from 1987 to 1993 and is now president of the University of Oklahoma, said that attending the briefings was “one of the most deeply disturbing experiences I have had” and that “I wanted to take a bath when I heard it. I was ashamed of it.” He said he concluded that “fear was used to justify the use of techniques that violate our values and weaken our intelligence” and that the agency did not prove those methods “are particularly effective at getting the truth.”

What the piece might have added is that David Boren is George Tenet’s mentor. To call Boren protective of the CIA is a severe understatement — he might not have ever called it “my CIA” the way Carl Vinson used to call the Navy “my Navy,” but in my conversations with Boren, he’s expressed a similar sentiment. And here he is publicly saying that the CIA was using “fear” to get experienced legislators and representatives of the next administration to endorse a program with an uncompelling justification.

The public version of this is what you hear from Dick and Liz Cheney. One wonders if they ever asked how the CIA, which did not have a corps of experienced interrogators before 9/11, knows these methods to be, as Boren says, “particularly effective at getting to the truth.”

Mark Hosenball of Newsweek, one of the best intelligence reporters there is, has more in this week’s issue about an additional twist in that emerging drama, one that gets at something Daphne blogged yesterday. Progressives in Congress see Panetta as an ally for congressional inquiries into torture:

Officials familiar with the views of Obama’s team insist there’s no massive probe coming. But a senior Democrat on the Senate Intelligence Committee, Oregon’s Ron Wyden, told NEWSWEEK he will push to declassify top-secret CIA interrogation files outlining how the agency came to use methods such as waterboarding; what its legal authorizations were for doing so; and what (if any) evidence exists to demonstrate that such techniques actually worked.

Former acting CIA general counsel John Rizzo, you may want to lawyer up.

Wyden’s proposal is something short of a full-fledged congressional probe into torture. But here’s another thing worth considering. Clearly Sen. Dianne Feinstein (D-Calif.), the incoming chairwoman of the Senate intelligence committee, is close with Kappes. Kappes is highly esteemed by the National Clandestine Service — the CIA operatives who’d prefer not to spend the next however-many years under investigation for torture. (Not that this makes Kappes a torturer; this is just the lay of the land as best as I can perceive it.) Will Kappes reach out to Feinstein to block or slow-walk a probe? What does Feinstein seek to do with her committee when it comes to investigating the torture regime of the past seven years? I’ve put the question to her staff.

I’m pleased to announce that John Brennan – a close advisor, CIA veteran and former leader of the National Counter-Terrorism Center  – will be my Homeland Security Advisor and Deputy National Security Advisor for Counterterrorism, serving with the rank of Assistant to the President.  John has the experience, vision and integrity to advance America’s security.

The point isn’t just that Obama hugged Brennan. (“A close advisor… experience, vision and integrity.”) Assistant to the President” is the highest rank that any White House staffer can hold. Anyone with that rank has the right to walk into the Oval Office and get a sit-down with the president. At the beginning of the Bush administration, Dick Cheney fought to ensure that Scooter Libby held that rank.

Now, what’ll that mean? At a minimum, it’ll mean that when Obama is unsure of something he’s hearing from CIA, or from Dennis Blair as Director of National Intelligence, he’ll turn to Brennan for a second or third opinion. It’s way too early to know — but that won’t stop me from wondering — if Brennan at the White House and Deputy CIA Director Steve Kappes might be the actual centers of power for the intelligence community.

Now it’s up to Panetta and Blair to explain what exactly they intend to do in their jobs. For a primer on the endless number of Maalox moments that await the intelligence community’s leadership, check out this piece of mine from last year. To the points I listed, you can add the possibility of a congressionally-mandated inquiry into rendition, detention and torture. Why anyone would want these jobs, I simply do not know.

But anyway. Mark Mazzetti of the New York Times is hearing that the order of the day is to roll back the torture programs of the Bush administration:

Aides to Mr. Obama say they have no intention of directing Mr. Panetta to oust C.I.A. officials who played a role in the agency’s secret interrogation and detention program. Instead, they say, the new administration will focus on reversing the rules that authorized the C.I.A. to carry out aggressive interrogations.

Mazzetti’s piece reports that there’s concern within CIA — rather naturally — that Panetta might throw the agency to the congressional dogs. But isn’t it really the other way around? The leakers are setting up a media narrative whereby Panetta has to be dependent on agency veterans to be effective. Hence the retention of Steve Kappes as CIA deputy director, which raises some questions for Jeff Stein of CQ:

But will Kappes be Panetta’s loyal consigliore, or double-dealing protector of the way things are?

Can he be said to be the new leader’s agent of “change,” implementing a break from the agency’s record as obedient servant on water-boarding, secret extraditions to foreign dungeons and warrantless wiretapping?