Isolation doesn't work

Fareed Zakaria closed this week's episode of his PBS show Foreign Exchange with the following editorial gem (click here for full transcript):

We’ve had a policy of regime change against Fidel Castro for the last four decades and it isn’t working. There’s a lesson here; take Cuba and Iran. We’ve tried isolation and punishment and sanctions on both for years--decades. Yet, both regimes remain firmly in power thumbing their noses at Uncle Sam.
By contrast, look at Libya and Vietnam. Washington has taken a strikingly different tact towards them normalizing relations with Vietnam, nudging Libya towards reform; both are still dictatorships to be sure, but Vietnam is opening and slowly and Libya has renounced terrorism and welcomed tourists and trade.
By piling on sanctions and keeping a country totally isolated, the United States only insures that the state becomes more powerful and civil society remains weak. But to change a regime short of war, you actually have to do the opposite--empower society--not the state, and it is commerce, contact, and information that are the most powerful agents of change in today’s world. This Administration should have more faith in the power of capitalism.