There is increasing speculation about Hillary Clinton`s possible appointment as secretary of state, according to BBC.

Reports are coming out that a serious vetting process is under way to determine the possible pitfalls of such an appointment.

Mr Obama`s team is unlikely to be looking for an excuse to shoot down the idea, but rather genuinely making sure all the bases are covered before any firm jobs offer or announcements are made.

While the story continues to be carried forward based on unnamed Democratic officials quoted in the US media, it is probable that Mr Obama would have found a way to quash it if there was not some truth to it.

"No one has called to say `Don`t go too far on this`," said James Carville, a long-time Clinton friend, quoted in the Washington Post.

Other names have been mentioned over the last few weeks for the position of Secretary of State, such as Senator John Kerry, from Massachusetts, who ran for president in 2004.

Bill Richardson, New Mexico`s governor, even went to Chicago last week for talks with President elect Barack Obama, reportedly about the position of secretary of state.

So why does Mr Obama`s former rival for the Democratic nomination appear to be the favourite candidate?

Healing rifts

There are many pros. Almost everybody you ask in Washington has a positive reaction to the idea, including Republicans.

Former Secretary of State and Nobel prize winner Henry Kissinger said it would be an "outstanding" appointment.

It is likely to heal the rift inside the Democratic party caused by a bruising primary campaign.

By giving Mrs Clinton a top cabinet job, Mr Obama would come across as a confident leader, not afraid to reach out to rivals and surround himself with strong personalities.

The US media is full of stories about how Mr Obama may be seeking to create a "team of rivals", bringing in his opponents to promote creative debate inside his team, much the same way that Abraham Lincoln did.

Mr Obama made a reference to that style of governance in an interview with CBS`s Katie Couric earlier this year

Furthermore, the economic crisis will be a priority for Mr Obama at the start of his presidency. But with the US involved in two wars, in Iraq and Afghanistan, and the whole world seemingly waiting for the US to engage with it, foreign policy cannot be put on the back burner.

The former First Lady would be able to hit the ground running. She would have instant international stature and recognition as secretary of State, and world leaders would welcome her.

She also has the needed experience, knowledge and contacts that would allow Obama to rely on her while he`s busy fixing the country`s economy.

Conflict of interest?

Although they sparred during the primary campaign, and they do have a number of differences on specific subjects, the two Democrats share a lot in common in their world view.

They want to improve America`s standing in the world, they support sending more troops to Afghanistan, they agree on climate change and on the Middle East peace process.

But there are also cons.

With a vice-president as well steeped in foreign policy as Joseph Biden, careful consideration needs to go into how the two will work together.

There will be some pressure probably to keep Mr Biden out of foreign policy.

Many people are wary of a repeat of the Bush/Cheney dynamic. But thanks to Mr Biden`s experience and knowledge, his input can be invaluable.

There is also potential for conflicts of interest with Bill Clinton because of the former president`s globe-trotting, speaking engagements and business deals with foreign officials.

He has raised millions of dollars for his foundation and library but has not fully disclosed who his benefactors are.

Undiplomatic language

The New York Times reported on Monday that the Clinton Foundation had received $31m from a Canadian mining executive who was also involved in business deals with Kazakhstan.

The mining executive and Bill Clinton met Kazakhstan`s authoritarian President Nursultan Nazarbayev in September 2005.

While Hillary Clinton was in the Senate arguing against a deal that would let a Dubai-based company run a number of key US ports, Bill Clinton reportedly was advising the same company on how to deal with the growing controversy.

While Mr Clinton`s humanitarian and philanthropist work has been lauded, a structure would have to be found to make sure that his actions do not clash with or undermine US foreign policy.

Some argue his work may be used to Ms Clinton`s advantage, something to offer when the US government cannot deliver.

Some observers do not foresee that Bill Clinton`s work would stand in the way of his wife`s confirmation in the Senate.

However she voted in favour of the war against Iraq and choosing her may upset those voters who supported Mr Obama because he opposed the war - although he was not in the Senate yet at the time of the vote.

She also said that as president she would "obliterate" Iran, if they ever considered launching an attack against Israel.

Iran lodged a formal protest at the UN. Mr Obama had said he would meet with Iranian leaders after intense preparatory work- it is unclear whether Ms Clinton would be best placed to do that work after her comments.