By Paul Hughes
CARACAS, June 1 (Reuters) - Cuba's status as the black sheep of the western hemisphere stole the spotlight on Monday as delegates from 34 nations of the Organization of American States (OAS) gathered for their 28th annual assembly.
Despite U.S. pressure to keep Cuba off the agenda, the possibility of welcoming the communist-ruled island back into the OAS fold dominated early talks in Caracas.
``Ignoring the problem won't make it go away,'' said Mexican Foreign Minister Rosario Green at the meeting's first session.
``Mexico is aware that right now there is no agreement on the re-incorporation of Cuba, but that does not mean that we shouldn't deal with the Cuba issue in the OAS,'' she said.
Cuba was excluded from the OAS, which is celebrating its 50th anniversary, in 1962 at the insistence of the United States. Green's comments appeared to be a direct challenge to U.S. policy on Cuba.
Delegates said Washington was very concerned that Cuba would take center stage at the Caracas meeting and had made it clear that a formal discussion of its re-entry to the OAS was unacceptable.
U.S. Secretary of State Madeleine Albright arrived in Venezuela late on Monday to push home that message and immediately held what aides called a social meeting with Green.
Albright, the first U.S. secretary of state to attend the OAS General Assembly since George Shultz in 1989, was also expected to face sharp Mexican criticism for a recent U.S. sting operation against alleged money laundering.
Mexican officials have accused agents involved in the so- called ``Operation Casablanca'' of violating Mexican sovereignty and keeping them in the dark over a probe that implicated officials at 12 Mexican banks.
``Mexico has formally protested because it was an undercover operation which Mexico knew nothing about and because it violated Mexican law,'' Green told reporters.
Most OAS members oppose the U.S. policy of confrontation with Havana, centered on a 36-year-old economic embargo, favoring instead a dialogue with Fidel Castro's government that could lead to its eventual return to the OAS.
Countries including Canada, Mexico and Brazil have proposed the need for a debate on how best to achieve this goal.
OAS Secretary General Cesar Gaviria said Pope John Paul's January visit to Cuba showed that ``a new climate has emerged that allows a more constructive approach to this issue.''
But he was quick to stress that Cuba's return to the OAS would depend on ``greater public and economic freedoms as well as greater protection of human rights.''
U.S. officials said this comment by Gaviria ``is our position as well'' and sought to play down the Cuba debate.
``Castro has given no indication that he wants to rejoin the OAS,'' said one official, who asked not to be identified. ``Cuba is more of an anachronism than an active political issue of the day.''
An OAS report released at the meeting stated clearly that Havana still fell well short of the goals laid down by Gaviria.
The Inter-American Human Rights Commission report highlighted Cuba's absence of democratic elections, harassment of human rights activists and lack of a free press.
But it also criticized Washington's policy of isolating Cuba as ``not the ideal way to create a peaceful and gradual change to a pluralist and civil society.''
Many delegates said that under Cuba's existing political regime no amount of debate in Caracas would be sufficient to see the country readmitted to the OAS.
``Until Cuba begins to show some that it has got some commitment to the regulations and obligations of the OAS, I think it is difficult to consider its membership,'' Canada's Foreign Minister Lloyd Axworthy told Reuters.
Under pressure to shed its image as a talking-shop with no real influence, the OAS has streamlined its meeting to three from six days and encouraged frank, open debates as opposed to the scripted speeches which normally characterize these events.
Of the 34 member countries, 27 foreign ministers will attend. The U.S. delegation also includes the White House's special advisor on Latin American Thomas McLarty, making his final official trip before stepping down from his post on June 30.
22:08 06-01-98
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