Dec. 17 (Bloomberg) -- Latin America is looking to U.S. President-elect Barack Obama to end the embargo on Cuba and show respect for the area’s growing independence, regional leaders said at a heads-of-state meeting in Brazil.

Venezuelan President Hugo Chavez said he’s hopeful Obama can restore ties frayed under President George W. Bush. Brazil’s President Luiz Inacio Lula da Silva, citing Obama’s African heritage as a sign of change, called on him to end the five- decade U.S. “blockade” of Cuba. The region-wide summit of Latin American and Caribbean leaders ends today.

The focus on Obama underscores the importance of the U.S., the region’s biggest trading partner, even as the summit’s organizers excluded President George W. Bush to send a message that Washington’s so-called backyard is breaking away. U.S. exports and imports to and from Central and South America both reached record levels last year of $107 billion and $134 billion respectively.

“I’m confident he can deliver profound changes because Obama comes from one of the most discriminated, humiliated segments of American society,” Bolivian President Evo Morales, the country’s first indigenous chief executive, told reporters yesterday in Bahia.

‘Vengeful Injustice’

Morales said he’d wait for Obama before taking legal action against the U.S. for Bush’s decision last month to suspend trade benefits tied to cooperation in the U.S. war on drugs. Morales, who expelled the Drug Enforcement Administration alleging its agents were plotting against him, said the “vengeful injustice” would jeopardize jobs and eliminate as much as $21 million in annual textile exports for South America’s poorest country.

In a bid to fill the void, and smooth tensions of its own with Bolivia over natural gas contracts, Brazilian Foreign Minister Celso Amorim said the Mercosur trade bloc, which Brazil leads with Argentina, would absorb duty free up to $30 million in Bolivian exports next year.

Brazil organized the two-day summit in a bid to boost its international leadership and promote regional integration among the 33 Western Hemisphere nations divided by geography, language and ideology.

Aim at Bush

Still, even while expressing optimism about an Obama administration, the leaders took aim at his predecessor.

Host Lula joked, to a roomful of laughs at Bush’s expense, that he would throw a shoe at Chavez unless the usually long- winded leader kept his remarks brief -- a reference to an incident in Baghdad on Dec. 14 when a reporter threw shoes at Bush during a news conference. After Chavez delivered a five minute speech, Lula told shocked participants they’d just witnessed the “real transformation in Latin America.”

Minutes later Cuba was formally admitted as a member of the Rio Group, an informal regional body comprised of 23 Latin American and Caribbean nations. The U.S. engineered Cuba’s expulsion from the Washington-based Organization of American States in 1962, over its ties with the Soviet Union.

“We respect the will of other countries to remain members of the OAS, but we are members of the Rio Group and will continue being so,” President Raul Castro, on his first trip abroad since taking over the communist island from his brother two years ago, told the room to a loud round of applause.

‘Empire’

Morales today said Latin American countries should set a “deadline” for Obama to lift the trade embargo on Cuba. He also suggested the creation of a Latin America-only alternative to the Organization of American States that would bar the U.S.

“If they don’t lift the trade embargo, we should expel their ambassadors,” Morales said in a speech.

Chavez said Cuba’s presence at the summit brings it “back to the place it should have always been” among its Latin American brethren, a sign that the influence of the U.S. “Empire” was waning.

“Now that a new U.S. president is coming, it’s beneficial for those of us in the South to speak with our own voice and ask for respect in a new form of dialogue with the U.S.,” Chavez said.

Thomas Shannon, the top diplomat for Latin America at the State Department, said the U.S. continues to talk with regional allies about the importance of Cuba “respecting human rights and freeing political prisoners as a first step” toward a transition to democracy.

“It would be our hope that in the course of these meetings, as Latin partners engage Cuba, that they make this aspect of their engagement a priority,” Shannon said in an interview last week.

Obama, who has never been to Latin America and has yet to announce his advisers on the region, vowed to maintain the embargo on Cuba as a candidate, while promising he’d listen to local leaders on ways the U.S. can help the region overcome poverty.

“My policy toward the Americas will be guided by the simple principle that what’s good for the people of the Americas is good for the United States,” he said in his sole policy speech on the region, from Miami in May.

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

Last Updated: December 17, 2008 11:19 EST