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The Summiting Continues

What Obama should do during his first trip to Latin America.

Since Latin America and the Caribbean are still bitterly divided over what social model to adopt, you might point out to your counterparts that Trinidad & Tobago is more than just a meeting venue. It is a model of sorts. Its parliamentary democracy and market economy have given its inhabitants a per capita gross domestic product 50 percent higher than that of Venezuela, another oil and natural gas-producing country situated nearby.

The recessionary trembles that Latin American and Caribbean nations are experiencing had their epicenter in the United States. The drop in exports, investments, remittances and access to financing has put an end to six years of economic growth that lifted some 40 million people out of poverty in Latin America--although the burgeoning middle class is still more "low" than "middle."

You should persuade your counterparts of two things: First, that the U.S. will not behave like a banana republic in using fiscal and monetary effort to end the recession and restore the health of the financial system; second, that Latin leaders need to reform their pachydermic states in order to catch up with recently developed nations. Latin America could have done better during the recent commodity boom: Since 2001, its annual economic growth has averaged 3.6 percent, less than Africa's 5.8 percent and the Middle East's 5.2 percent. Investment rates have averaged 20 percent of GDP compared to Africa's 25 percent. In the last decade, despite periodic backtracking, China and Vietnam kept up their reform momentum while Latin America rested on its laurels.

You have decided that your Latin American policy will rely heavily on Brazil keeping the South American neighborhood reasonably quiet. Don't bet on it, but avoiding U.S. engagement in Latin American squabbles is still a good idea. You also want to beef up the ethanol partnership with Brazil.

But there is another problem. The Tupi oil field--the largest discovery in the world for a decade--means that Brazil is now embarked on an energy path that runs contrary to your aim to reduce reliance on foreign oil. Given the freeze in capital markets, Brazil will not be able to develop Tupi soon, but the U.S. might end up buying oil from Brazil, perhaps replacing Venezuela as a source of 11 percent of its crude imports. Bear that in mind.    

Try to avoid the "Cubanization" of the summit. Your decision to lift restrictions on travel and remittances to Cuba for Cuban-Americans should give you room to avoid falling into the trap of turning the summit into an operatic confrontation on the Castro regime. That is what Venezuela's Hugo Chavez will attempt to do. The discussion about the half-century embargo should not take place in the context of a political ambush by Chavez.

Finally, begin to signal that the U.S. will gradually revise the war on drugs that you consider a failure. The discussion about decriminalizing marijuana has taken a surprising momentum in the U.S. since the decision by your attorney general not to go after dispensaries offering medical pot in 13 states. Sen. Jim Webb, D-Va., and the attorney general of Arizona, among others, have recently said they might be open to legalization. Major news outlets such as CNN, The New York Times and The Washington Post have been devoting considerable space to the issue. Knowing that the tide is turning and that the war on drugs has now come back to threaten the U.S. borders, you should start to de-emphasize the repressive approach.

Alvaro Vargas Llosa is a senior fellow at the Independent Institute and the editor of "Lessons from the Poor."

By Alvaro Vargas Llosa