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BUCHAREST (Reuters) - Romania's leftist government named a new defence minister in a mini-reshuffle on Tuesday, to handle a multi-billion-dollar plan to modernise its military to NATO standards.

The staunch Washington ally has promised to spend 2 percent of its gross domestic product on defence every year for the next nine years, and boost U.S.-backed defences that have riled Russia.

The ruling Social Democrats (PSD) said Economy Minister Mihai Fifor, 47, will replace Adrian Tutuianu who quit last week after his office said it could not pay defence staff wages in full, only to be contradicted hours later by the finance ministry.

"This is a key position. Fifor is a responsible person, he has the advantage of being an economy minister and closely working with the defence ministry on military industry," PSD leader Liviu Dragnea told reporters.

Dragnea said the economy portfolio would go to PSD lawmaker Gheorghe Simon.

NATO member Romania hosts a U.S. ballistic missile defence station and has sent thousands of troops to operations in Iraq and Afghanistan.

Among the first steps in its military expansion is the purchase of $1.25 billion of mobile artillery rocket systems, with Lockheed Martin as prime contractor, a plan endorsed by the U.S. State Department last month.

Russia has said it sees the U.S.-backed missile defence system in Romania and other European countries as a threat and a ploy to neutralise its nuclear arsenal.

(Reporting by Radu Marinas; Editing by Andrew Heavens)

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