By JOHN RICE
Associated Press Writer

SAN JOSE, Costa Rica (AP) -- Cuba and Panama agreed to restore consular relations on Friday, taking a step toward renewal of full diplomatic ties at a meeting on the sidelines of an Ibero-American summit.

The agreement came a day after the summit nations, including Panama, agreed to condemn the action that led to the break in late August: Panama's release of four Cuban exiles accused of trying to kill Cuban President Fidel Castro.

Panama's president at the time, Mireya Moscoso, pardoned the men just days before leaving office, outraging Cuba and ignoring a Venezuelan arrest warrant for the group's leader, Luis Posada, who is accused in the 1976 bombing of a civilian jetliner in which 73 people died.

The reconciliation between Panama and Cuba came during a meeting between new Panamanian President Martin Torrijos and Cuban Vice President Carlos Lage and Foreign Minister Felipe Perez Roque.
 
Perez Roque called approval of the draft resolution that condemns all forms of terror and criticizes Moscoso's pardon "an important result" and said "Cuba feels satisfied."

During the weekend meeting, leaders from Spain, Portugal and 19 Latin American nations planned to endorse an education declaration and 14 other resolutions, including a commitment to fight terrorism and another to offer financial support for the U.N. peacekeeping mission in Haiti.

The declaration makes sweeping but relatively vague promises of greater emphasis on education. The most specific call was for multilateral lending organizations to let poor countries pay off part of their debts at home by expanding spending on education.

The summit declaration also reaffirms the Ibero-American community's condemnation of a U.S. law that punishes foreign companies doing business in Cuba.
 
Cuba's chilled relations with Mexico also continued to thaw on Friday as Perez Roque met with Mexican Foreign Secretary Luis Ernesto Derbez.

The two sides briefly withdrew their ambassadors in May after accusing Cuba of meddling in its internal affairs. Cuba already had been upset by Mexican criticism of its human rights record.

© 2004 The Associated Press.