March 10 (Bloomberg) -- President Barack Obama should dismantle the five-decades-old trade embargo on communist Cuba to improve relations with Latin America, the Washington-based policy group Inter-American Dialogue said.

“A policy shift on Cuba, which carries great symbolic weight in the region, would be a powerful signal that Washington will be more responsive to Latin American views,” according to the report published today.

U.S. relations with Latin America are at the “lowest point since the end of the Cold War,” the institute said. Resentment over the invasion of Iraq, the U.S.’s reaction to the 2002 coup against Venezuelan President Hugo Chavez and the proposed construction of a wall along the Mexican border have all “badly damaged” relations, the group said.

Still, regional enthusiasm generated by Obama’s election means that “no U.S. President since John F. Kennedy has had a greater opportunity” to enhance ties with the region, the report concluded. Recasting U.S. policy on Cuba is a high priority because it can lead to cooperation on other issues such as immigration, free trade and illegal drugs, the report said.

The report, titled “A Second Chance: U.S. Policy in the Americas,” reflects the views of the Dialogue’s membership, which is led by former Chilean President Ricardo Lagos and Carla Hills, U.S. Trade Representative under George H.W. Bush.

During his campaign for president, Obama vowed to maintain the U.S. trade ban, promising at the same time to loosen regulations that limited visits and remittances to the Caribbean island by Cuban-Americans.

Obama also said he would be willing to talk with Cuba and begin easing the sanctions if the government made democratic moves such as freeing political prisoners.

Brazilian President Luiz Inacio Lula da Silva has called on Obama to end the U.S. “blockade” of Cuba. The two leaders are scheduled to meet at the White House on March 14.

To contact the reporter on this story: Joshua Goodman in Rio de Janeiro at jgoodman19@bloomberg.net

Last Updated: March 10, 2009 12:31 EDT