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Obama Policy Shifts Course In Cuba, Region

The Obama administration has long touted its efforts to achieve a more dynamic and cooperative relationship with its Southern neighbors. Yet Latin American leaders have constantly brought up one stumbling block - America's hardline policies toward Cuba. Obama's historic announcement on Wednesday set a different tone.

"U.S. policy toward Cuba was perceived as a litmus test, a test case of the new approach toward the region," said Arturo Lopez-Levy, adjunct faculty at the NYU School of Professional Studies Center for Global Affairs. "President Obama has been strategically clever, because he has eliminated a Cuban distraction for an important hemispheric agenda."

Following Obama's remarks, leaders from Colombia, Brazil, Mexico and even Venezuela praised the American president. The Organization of American States (OAS) Secretary General Jose Miguel Insulza called it a decision of "great vision" by the U.S. and Cuba which opens "a path to normalization from which there is no return." Insulza went further, urging the U.S. Congress to lift the embargo.

In 2009, in contrast to the U.S., all OAS members had unanimously voted to reinstate Cuba into the group, something that was pointed out by Insulza in his remarks.

Obama's actions have opened up more "space" to discuss issues such as drug trafficking and immigration at the upcoming Americas Summit in Panama in April, said Lopez-Levy. "This is not a gift to anybody, it enhances American positions in Latin America and the Caribbean."

This was echoed by a senior Administration official speaking on condition of anonymity to reporters in a White House conference call Wednesday, who said that current policies toward Cuba had been a huge burden, if not an albatross. "A key factor in every bilateral relationship we have, including with our closest friends in the hemisphere is when are you going to change your Cuba policy?"

The official said Obama's announcement would allow the U.S. to focus on issues such as human rights - something which always was thrown back at the U.S. over its Cuba policy.

"In the last Summit of the Americas, instead of talking about the things that we were focused on - exports, counter-narcotics, citizen security, we spent a lot of time talking about U.S. Cuba policy," the official said.

Initially, the biggest impact of Obama's easing of restrictions will be on Cuba's economy, which is about the same as that of a good-sized American city like Austin, according to Allert Brown-Gort, a consultant and faculty fellow at the Kellogg Institute for International Studies.

"The effect on Cuba is much more profound than for the U.S.," said Brown-Gort. Beside Cuba, there will be knock-on effects; nations like Mexico are expected to increase investments now that it's less risky for countries friendly to the U.S.

One interesting question mark, say experts, is what happens to Venezuela.

"Maduro has been trying to keep things together since Chavez's death and Cuba was a main bulwark," said Brown-Gort. This could gradually change as Cuba eventually starts developing more relationships with other countries - including the U.S.

"The embargo has driven Cuba into the arms of others [like] Venezuelans, Chinese," said Jose Gabilondo, a professor of law at Florida International University whose specialty is banking and finance. As Cuba rejoins the OAS, IMF and the World Bank, the island will be a player in multilateral and regional institutions. "Soon there will be tighter economic ties between the U.S. and Cuba, and all these exporters will want to trade with Cuba," Gabilondo said.

The administration official said the easing of restrictions should substantially open the door for the U.S. in the hemisphere. "This could be a transformative event for the U.S. in Latin America."

--Additional reporting from Suzanne Gamboa