• Bloomberg


Cuba and the U.S. will begin to normalize relations in a surprising move Wednesday by the Obama administration that will loosen a trade and travel embargo that is among the last remnants of Cold War policy.

The action means not simply the opening of a U.S. Embassy in Havana but the lifting of restrictions that have limited commerce and kept aficionados from legally bringing Cuban cigars to U.S. soil.

The thaw, wrapped into the release of American aid worker Alan Gross and the exchange of a U.S. spy for three Cuban intelligence agents, was announced Wednesday by President Barack Obama and Cuban leader Raul Castro speaking at about the same time.

“Today, the United States of America is changing its relationship with the people of Cuba,” Obama said at the White House. “Neither the American nor Cuban people are well served by a rigid policy that’s rooted in events that took place before most of us were born.”

The change, while drawing criticism from some Cuban-American lawmakers, comes amid a shift in which the influence of aging anti-Castro hardliners — many of them refugees who fled the island by boat in previous decades — has given way to a younger, more pragmatic generation favoring liberalization.

The Cuban leader said “the progress achieved in the exchanges we’ve had shows that it’s possible to find solutions to many problems.

“We have to learn the art of living together with our differences in a civilized way,” Castro said in Havana.

Cuba’s decision was also rooted in economic reality. Its longtime patrons, Russia and Venezuela, have lost influence and been squeezed by plummeting oil prices.

The changes follow a rare private intercession by Pope Francis, the Catholic Church’s first Latin-American pontiff, secret meetings between Cuban and American delegations at the Vatican and in Canada, and an extraordinary telephone conversation lasting more than 45 minutes Tuesday between Obama and Castro.

The White House announced the steps after Cuba released Gross on humanitarian grounds. Following high-level talks between the governments since the spring, the U.S. and Cuba also made a parallel prisoner exchange of three Cuban intelligence agents for a U.S. intelligence asset who has been imprisoned for more than 20 years, according to administration officials who briefed reporters on condition of anonymity before Obama spoke.

Cuba also agreed to release 53 people the U.S. considers political prisoners, some of whom have already been released, the officials said.

The White House plans to move swiftly. The administration expects to issue regulations within weeks and open an embassy as soon as it is logistically possible, according to White House officials who briefed reporters on condition of anonymity before Obama spoke. Obama said he will work with Congress to lift the full trade embargo.

Travelers will be able to use credit and debit cards in Cuba and Americans will be able to legally bring home up to $100 in previously illegal Cuban cigars treasured by aficionados.

U.S. companies will be permitted to export to Cuba telecommunications equipment, agricultural commodities, construction supplies and materials for small businesses. U.S. financial institutions will be allowed to open accounts with Cuban banks.

Limits on Cuban-Americans’ remittances to relatives in their homeland will jump to $8,000 from $2,000 annually. U.S. companies will be permitted to export an expansive list of goods,, including building materials and be allowed to build telecommunications infrastructure on the island.

Exports will mainly be permitted to Cuba’s emerging private sector, including residential goods and equipment for small businesses and agriculture, an official said.

The president also ordered the State Department to review Cuba’s designation as a state sponsor of terrorism. Cuba has been listed as a terrorism sponsor since 1982, the official said.

Cuba also agreed to allow greater Internet access for its citizens and easier telecommunications with the United States.

The U.S. and Cuba will begin a series of high-level visits between the government as they negotiate normalization of relations with a visit to Havana in January by an assistant secretary of state for talks on migration policy.

The U.S. isolation of Cuba has endured in part because of the influence of the Cuban-American exile community in Florida. Generational shifts have reduced support for the embargo, though Obama’s moves drew criticism from some Cuban-American lawmakers.

Senate Foreign Relations Chairman Robert Menendez, who gives up his gavel to a Republican in January, criticized Obama’s action, saying it “sets an extremely dangerous precedent” that “invites dictatorial and rogue regimes to use Americans serving overseas as bargaining chips.”

“President Obama’s actions have vindicated the brutal behavior of the Cuban government,” said the New Jersey Democrat, whose parents fled Cuba during Fidel Castro’s reign. “I fear that today’s actions will put at risk the thousands of Americans that work overseas to support civil society, advocate for access to information, provide humanitarian services, and promote democratic reforms.”

Sen. Richard Durbin, an Illinois Democrat close to Obama, said the action is long overdue.

“Opening the door with Cuba for trade, travel, and the exchange of ideas will create a force for positive change in Cuba that more than 50 years of our current policy of exclusion could not achieve,” Durbin, who visited Gross in Cuba in 2012, said Wednesday in an emailed statement.

The pope played a key role in the talks, sending a letter to Castro and Obama urging them to resolve the dispute over Gross and pursue closer relations. An official said the request from the pope was rare and came shortly after a meeting Obama had with Francis at the Vatican earlier this year.

The Vatican hosted delegations from the two countries for talks, though most of the meetings were held in Canada, an administration official said.

Gross, a 65-year-old American, left Cuba on a U.S. government plane Wednesday morning to fly to the U.S. and landed at Andrews Air Force Base outside Washington shortly before Obama spoke. The three Cuban agents were returned to their country also in the morning, an administration official said.

Gross was arrested by Cuban officials while working to expand Internet access for Havana’s Jewish community. He was accused of undermining the Cuban state and in December 2009 was sentenced to 15 years in prison.

Trade with Cuba has been severely restricted for half a century due to a Cold War freeze. The U.S. hasn’t had normal diplomatic relations with Cuba since 1961. The two countries had no diplomatic relations until 1977. Since then, the U.S. has been represented by an interests section within the Swiss Embassy to Cuba.

Under President John F. Kennedy, the Central Intelligence Agency backed an armed invasion of the island along with repeated attempts to assassinate Cuban President Fidel Castro, Raul’s older brother.

The U.S. has maintained an embargo on most trade with the island, a policy that periodically has come under pressure from American business interests that see potential profit there. The World Bank, citing 2011 data, pegs the island’s gross domestic product at more than $68 billion — about what the U.S. produced that year in a day and a half, according to data compiled by Bloomberg.

Under Raul Castro, who took over from his brother, Fidel, as acting president in 2006 and succeeded him two years later, the Marxist nation has taken tentative steps away from central planning. In July, Cuba lowered its economic growth forecast for this year to 1.4 percent.

Earlier this week, Moody’s said the economy on the island about 90 miles off the coast of Florida was slowing, citing “decreased reform momentum.”

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