WASHINGTON -- Former Republican Sen. Chuck Hagel has emerged as the leading candidate to become President Barack Obama's next secretary of defense and may be nominated as soon as this month, according to two people familiar with the matter.

Hagel, who served as an enlisted Army infantryman in Vietnam, has passed the vetting process at the White House Counsel's office, said one of the people. The former Nebraska senator has told associates that he is awaiting final word from the president, said the other person. Both requested anonymity to discuss personnel matters.

Other contenders are Michele Flournoy, former defense undersecretary for policy, and Ashton Carter, deputy defense secretary, administration officials have said.

Obama, a Democrat, invited Hagel, 66, to the White House on Dec. 4 to discuss the position with him, according to an administration official. The president hasn't made a final decision, said another official. Both asked for anonymity to discuss internal deliberations.

White House press secretary Jay Carney declined to comment Thursday on whether Obama is considering Hagel, saying only that the two-term lawmaker was widely respected.

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The current defense secretary, Leon Panetta, 74, has indicated he won't serve in Obama's second term. His successor will face a shrinking budget and the need to cut defense programs as well as managing the drawdown of U.S. troops in Afghanistan.

The next defense secretary also has to deal "with reshaping the force after more than 12 years of war," said Anthony Cordesman, a military analyst at the Center for Strategic and International Studies. "If anything escalates in Iran, either a conflict in the gulf, which affects 20 percent of the world's oil supplies, you may well have to fight a serious conflict," he said. "It isn't a conflict that anybody has budgeted for."

Hagel "has the political skills to navigate some really treacherous waters," said former Nebraska Sen. Bob Kerrey, a Democrat. "He'll enjoy wide respect in the military himself, and for a civilian leader, that's important."

In the Senate, Hagel served on the Foreign Relations and Intelligence committees. Upon leaving after two terms, he joined the Georgetown University School of Foreign Service as a distinguished professor.