WRAPUP 2-Obama seeks to woo Latin America, scandal mars trip
* Secret agents sent home from Colombia in scandal
* U.S. leader more 'excited' than ever about region
* About 30 heads of state meeting at summit
* Controversy grows over Cuba's absence
CARTAGENA, Colombia, April 14 (Reuters) - President Barack Obama tried o n S aturday to convince skeptical Latin Americans that Washington had not turned its back on them - but a prostitution scandal involving U.S. security personnel marred the charm offensive.
Despite the host of weighty topics at the two-day Summit of the Americas in Colombia, corridor chatter revolved around a murky incident in a Cartagena hotel that led to U.S. Secret Service agents being sent home and five U.S. military members grounded.
U.S. authorities said they were suspected of "misconduct" and an investigation was under way. A local Colombian police source and U.S. media said prostitutes were involved - but there was a wall of official silence about details of the case.
"I had a breakfast meeting to discuss trade and drugs, but the only thing the other delegates wanted to talk about was the story of the agents and the hookers," chuckled one Latin American diplomat in the historic city of Cartagena.
While the Colombian policeman said the U.S. personnel tried to bring a prostitute into the hotel, rumors also flew of a fracas at a local brothel. L o cals were deeply unimpressed.
"They came to look after their president, not to have a party," Cartagena street vendor Rosa Elena Prieto said. "The weak flesh of men costs them their jobs."
Making no reference to the scandal, Obama tackled head-on accusations he had neglected Latin America - the United States' traditional backyard - while dealing with conflicts in Iraq and Afghanistan and other faraway global priorities.
"We've never been more excited about the prospect of working as equal partners with our brothers and sisters in Latin America and the Caribbean," he told business officials before the start of the main heads-of-state summit, which will last into Sunday.
Obama also hailed the potential to boost trade between the "nearly a billion consumers" of North and South America.
The reality, though, is different: China has taken advantage of perceived U.S. neglect and is now the main trade partner for various countries, including regional powerhouse Brazil.
Running for re-election in November, Obama is also under pressure from domestic voters to show his foreign policies give priority to trade that creates American jobs.
Latin American leaders want the United States to be more engaged on issues like rapprochement with communist-led Cuba and an overhaul of anti-drug policies, including possible legalization as a way to take profits out of the trade.
"Sometimes those controversies date back to before I was born. And sometimes I feel as if ... we're caught in a time warp ... going back to the 1950s, gunboat diplomacy, and Yankees, and the Cold War and this and that," Obama said wryly.
Despite praise for robust economic growth in Latin America and enthusiasm over trade, the U.S. president was firm in rejecting calls to legalize either growing or consuming drugs.
Many in Latin America feel a fresh approach is needed - and a shift away from hard-line policies - after decades of violence, in producer and trafficking nations like Colombia and Mexico.
"I don't mind a debate around issues like decriminalization. I personally don't agree that's a solution to the problem," Obama said. "But I think that given the pressures that a lot of governments are under here, under-resourced, overwhelmed by violence, it's completely understandable that they would look for new approaches, and we want to cooperate with them."
Colombian pop star Shakira brought a splash of showbiz to the proceedings by singing Colombia's national anthem for the more than 30 heads of state present at the start of the summit.
Missing from the Organization of American States' sixth such hemispheric gathering were Ecuador's Rafael Correa, who is boycotting the event over Cuba's continued exclusion, and Venezuela's Hugo Chavez, who is undergoing cancer treatment.
Argentina's foreign minister told media from his country the final summit declaration was stalled over the issue of Cuba, with 32 nations supporting its inclusion in the next Summit of the Americas, but the United States vetoing that.
Brazilian President Dilma Rousseff gave Obama an earful on U.S. expansionist monetary policy that is sending a flood of funds into developing nations, forcing up currencies and hurting competitiveness.
"The way these countries, the most developed ones, especially in the euro region in the last year, have reacted to the crisis with monetary expansion has produced a monetary tsunami," she said, as Obama listened.
"Obviously we have to take measures to defend ourselves. Note the word I chose - 'defend', not 'protect,'" added Rousseff, whose government's actions to curb imports have been decried as protectionism by some in the region.
The host, President Juan Manuel Santos, is using the summit to showcase Colombia's new economic stability after decades of guerrilla and drug violence that scared off investors.
The latest Time magazine carried his portrait over the cover headline, "The Colombian Comeback", delighting his supporters.
Although seeking to position himself as a regional mediator - particularly between conservative governments and the anti-American bloc led by Chavez - Santos nevertheless weighed in to support Brazil's position in front of Obama.
"In some way, (they) are exporting their crisis to us via the appreciation of our currencies," Santos said, referring to the damage done to local exporters as Latin American currencies gain strength. "I share President Dilma Rousseff's anxiety."
Despite Colombia's traditional closeness to Washington, which has helped finance its war on guerrillas, Santos also spoke bluntly on the issue of Cuba.
"It's an anachronism that keeps us anchored to a Cold War era we came out of various decades ago," he said, calling another summit without Cuba "unacceptable."
From Havana, Cuba's former president, Fidel Castro, weighed in with a withering newspaper column about the OAS and its "guayabera summit" - a reference to the loose-fitting shirts popular in the Caribbean and being worn by many heads of state in Cartagena.
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