The U.S. will embark on the most massive overhaul of its relations with Cuba in more than 50 years, according to senior administration officials.
U.S. President Barack Obama and Cuba's Raul Castro spoke separately at noon ET about relations between the two countries, which have had a strained relationship for decades. The U.S. first imposed an embargo on Cuba in 1960 and cut diplomatic ties the following year.
This follows Cuba's release of American Alan Gross from a Cuban prison where he spent five years on espionage charges along with another person who'd been held in Cuba and a separate exchange of prisoners of Cuban prisoners held in the U.S.
As part of the overhaul, the U.S. will initiate discussions to re-establish diplomatic relations with Cuba and work to re-establish an embassy in Havana.
Meetings between the countries began last year with a series of talks in Canada and the Vatican.
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Following the news, Herzfeld Caribbean Basin Fund, which invests in countries in the Caribbean Basin, shot up more than 40 percent.
In the coming weeks, travel to the country will ease in 12 existing categories, including family visits and certain export activities. Remittance levels will be increase as well. Currently, travel to Cuba is highly restricted. Tourist travel will remain banned as only Congress has the power to lift it.
Obama has implemented two prior moves aimed at relaxing travel restrictions during his presidency.
Licensed U.S. travelers to Cuba will be allowed to import $400 worth of goods, including $100 of tobacco, such as Cuban cigars, and alcohol combined. However, this is for personal consumption rather than commercial re-sale.
Certain exports from the U.S. including building materials for private residential construction will also be allowed. Travelers to Cuba will be able to use U.S. credit and debit cards as part of the policy change.
Cuban access to telecommunications will also open up as providers will be allowed to establish infrastructure to provide internet and telecommunications services to the country's residents. Currently, the nation has one of the lowest's internet penetration rates in the world at merely 5 percent.
In recent years, the Cuban government has slowly implemented some economic reforms, including letting Cubans buy cell phones and buy and sell used cars.
The U.S. remains Cuba's biggest food supplier. Cuba is facing extra pressure amid the political and economic turmoil in Venezuela. The South American country accounts for roughly 40 percent of Cuba's trade. Cuba largely depends on highly subsidized crude oil from Venezuela. As oil prices have plunged, the Venezuelan economy has fallen apart, putting pressure on it to reduce aid to Cuba and elsewhere.
—AP contributed to this report