By Kenneth R. Bazinet
Daily News Staff Writer
WASHINGTON—President-elect Obama has pulled off a feat of daring and difficult diplomacy - clearing the way to invite ex-rival Hillary Clinton into his cabinet as secretary of state, Democratic sources said Thursday night.
Obama is planning to formally announce his nomination of the New York senator and former First Lady after Thanksgiving, the sources said.
That news came amid word that aides to both sides had resolved complex issues on how to keep former President Bill Clinton's business and charitable activities from posing a conflict.
"Financial disclosure issues have been worked out," a source said. "Things are on track."
Obama's overture to Clinton, who fought him tooth and nail in a marathon Democratic primary contest and then campaigned hard for his election, won bipartisan praise when the first word of it leaked a week ago.
But it has been an often rocky road since, with members of the Obama transition team suspicious of posturing and spinning from Clinton's side and reports that she was vacillating on whether she would accept the job.
The biggest obstacle fell after Bill Clinton handed over his financial records Thursday, and Obama and Clinton had "good, substantive talks," a source said.
Obama plans to wait until after Thanksgiving before pulling the trigger on the nomination because "the full national security team is still being worked out," and he wants to have all the members in place before he makes the announcement, the source said.
"This administration is gonna be some wonderful ride," said a jubilant former Clinton aide who had pushed for her to become Obama's vice presidential choice.
Clinton in the last few days began aggressively pursuing the secretary of state slot and mounted an all-out sales campaign amid fears the job might be slipping away, sources said.
Former Clinton campaign aides and some of her inner-circle advisers - aka Hillaryland - were part of a coordinated effort to win her the top State Department post, the Clinton source confirmed.
These Clinton allies were e-mailing and working the phones with Obama contacts, appearing on cable TV and leaking optimistic scenarios to the media.
"All you have to do is pay attention and see how they are operating, and it looks like [a campaign]," said the Democratic source.
Clinton, appearing Thursday night at the grand opening of the SL Green StreetSquash Center in Harlem, was told by a reporter that young people want to know if she'll be the nation's next top diplomat.
"Somehow I don't think that's on a lot of young people's minds," she said after a laugh.
Some Democrats and government insiders have questioned whether Clinton is too independent and politically ambitious to be an effective secretary of state.
But Obama is said to admire her talents and experience, as do many other Democrats.
Clinton would have to surrender her New York Senate seat, which she has held for eight years, to take the job.
Now that Clinton's nomination is looking more like a done deal, there will likely be an accelerated scramble among New York Democrats clamoring to be named by Gov. Paterson to her Senate seat.
Clinton spokesman Philippe Reines would not comment Thursday night, except to say that any questions about cabinet appointments are for Obama's transition team to address.
With Leo Standora and Erica Pearson