Church bells ring in Havana as U.S. and Cuba open relations

HAVANA - Cuban President Raul Castro told Cubans Wednesday his nation has agreed to restore relations with the United States, 53 years after diplomatic ties were broken.

Castro spoke in a televised address that coincided with a statement by U.S. President Barack Obama in Washington, saying that while profound differences remain between the two countries, they must learn to live with them "in a civilized manner."

Streets in Havana were calm as people gathered around television sets and teachers stopped their midday lessons to listen to the historic news.

But as Castro spoke, church bells tolled in celebration at the University of San Geronimo in Old Havana.

"For the Cuban people, I think this is like a shot of oxygen, a wish-come-true, because with this, we have overcome our differences," said Carlos Gonzalez, a 32-year-old IT specialist. "It is an advance that will open the road to a better future for the two countries."

Guillermo Delgado, a 72-year-old retiree, welcomed the announcement as "great news."

"It is a victory for Cuba because it was achieved without conceding basic principles," Delgado said. "For Obama, I think it's a spectacular step, that all countries should change this irrational policy."

In his address, Castro thanked the Vatican and the Canadian government for helping in the negotiations between the U.S. and Cuba.

Castro and his brother, Fidel, led the 1959 rebellion that toppled the dictatorship of Fulgencio Batista. The U.S. initially recognized the new government but broke relations in 1961 after Cuba veered sharply to the left and nationalized U.S. owned businesses.

Raul Castro is trying to boost his nation's economic fortunes in the face of stalled reforms and falling oil prices that have hit his allies hard.

"After today, everything changes," said Carlos Alzugaray, a former Cuban diplomat who lives on the island and has close relations with the Castro government.

"This promises to be the biggest shift in our relations in 50 years," said Ted Henken, an analyst and author of "Entrepreneurial Cuba," which examines the economic and social changes Castro has instituted since taking over from his more famous brother in 2006.

Those changes have allowed Cubans to buy and sell property, purchase a car, travel abroad without permission, open their own businesses and hire employees. But the reforms have fizzled recently due to Cubans' lack of cash.

Cuba's moribund economy grew by just 1.4 percent this year, according to the government's own estimates, and many private businesses that opened to fanfare in the last couple of years have closed. A recent foreign investment law so far has failed to attract much capital.

Meanwhile, the dramatic slide in global oil prices has cratered the economy of Cuba's main benefactor, Venezuela, which supplies the island with about $3 billion a year in heavily subsidized oil. Another key ally, Russia, also is in economic turmoil.

"If you look around the world, (Cuba is) in urgent need of economic resources, hard currency. Russia's under sanctions of course, Iran's under sanctions, the Chinese are pretty hard-headed businesspeople," said Paul Webster Hare, a former British ambassador to Havana. "So if they want to quickly turn on the tap of new hard currency, America is top of the list."

Another reason for Cuba's openness could be more personal.

Raul is 83, Fidel, 88, and both men are acutely aware they will not be around much longer to oversee the revolution they led in 1959. President Castro has said he aims to step down in 2018 and wants to leave the country well on a path to reform - on his terms.

Alzugaray, the former Cuban diplomat, said Castro could face opposition from hardliners, but that he has the political clout to deal with any dissent, something his successor might not.

"This is Raul Castro we're talking about, the historic second in command of the revolution, and that will be of influence with even the most hard line sectors," he said.

For his part, Castro has made clear that his country remains committed to the Communist ideals of the revolution, meaning a multi-party political democracy, free press and full-blown capitalism are not in the cards anytime soon.