NEW YORK (CBSNewYork/AP) — The United States and Cuba have agreed to re-establish diplomatic relations and open economic and travel ties, marking a historic shift in U.S. policy toward the communist island after a half-century of enmity dating back to the Cold War.

The announcement comes amid a series of new confidence-building measures between the longtime foes, including the release of American Alan Gross, as well as a swap for a U.S. intelligence asset held in Cuba and the freeing of three Cubans jailed in the U.S. The deal was brokered in part by Pope Francis.

President Barack Obama announced the policy shift during a noon press conference Wednesday, saying the U.S. is ending its “outdated approach” to Cuba that has failed to advance U.S. interests.

“Isolation has not worked,” Obama said in remarks from the White House. “It’s time for a new approach.”

As Obama spoke, Cuban President Raul Castro was addressing his own nation from Havana, saying he welcomes the restoration of relations with the United States.

In a nationally broadcast speech, the Cuban leader said profound differences remain between Cuba and the U.S. in areas such as human rights, foreign policy and questions of sovereignty. But he said the countries have to learn to live with their differences “in a civilized manner.”

Obama and Castro spoke by phone for more than 45 minutes Tuesday, the first substantive presidential-level discussion between the U.S. and Cuba since 1961.

As part of resuming diplomatic relations with Cuba, the U.S. will soon reopen an embassy in the capital of Havana and carry out high-level exchanges and visits between the governments. The U.S. is also easing travel bans to Cuba, including for family visits, official U.S. government business and educational activities. Tourist travel remains banned.

Licensed American travelers to Cuba will now be able to return to the U.S. with $400 in Cuban goods, including tobacco and alcohol products worth less than $100 combined. This means the long-standing ban on importing Cuban cigars is over, although there are still limits.

The U.S. is also increasing the amount of money Americans can send to Cubans from $500 to $2,000 per quarter, or every three months. Early in his presidency, Obama allowed unlimited family visits by Cuban-Americans and removed a $1,200 annual cap on remittances. Secretary of State John Kerry is also launching a review of Cuba’s designation as a state sponsor of terror.

Obama does not have the authority to fully lift the long-standing U.S. economic embargo on Cuba, given that Congress enacted that policy. However, officials said he would welcome lawmakers taking that step.

Obama said he continued to have serious concerns about Cuba’s human rights record but did not believe the current American policy toward the island was advancing efforts to change the government’s behavior.

“I do not believe we can keep doing the same thing for over five decades and expect a different result,” he said.

There remains a divide on Capitol Hill over U.S. policy toward Cuba. While some lawmakers say the embargo is outdated, others say it’s necessary as long as Cuba refuses to reform its political system and improve its human rights record.

Sen. Marco Rubio, R-Florida, said the policy did nothing to address those issues.

“But it potentially goes a long way in providing the economic lift that the Castro regime needs to become permanent fixtures in Cuba for generations to come,” Rubio said.

High-ranking Cuban-American lawmakers in New Jersey are speaking out against the plans.

U.S. Senate Foreign Relations Committee chairman Robert Menendez, whose parents came to New York from Cuba just before he was born, called the release of Alan Gross “a moment of profound relief” for Gross’ family.

But he assailed the deal, saying “President Obama’s actions have vindicated the brutal behavior of the Cuban government.”

“Trading Mr. Gross for three convicted criminals sets an extremely dangerous precedent,” Menendez said. “It invites dictatorial and rogue regimes to use Americans serving overseas as bargaining chips. 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.”

Assembly Speaker Vincent Prieto, a Cuban native who emigrated to the U.S. when he was 11, said Wednesday he fears normalizing relations will strengthen the Cuban regime and “cement its permanency.”

Prieto says he knows “first-hand” the Cuban regime’s poor record on human rights and its resistance to democracy.

In New York City, Mayor Bill de Blasio, who spent his honeymoon in Cuba, said the move was decades overdue.

“I think the president’s doing the right thing,” he said. “I think this is part of moving us forward, and I actually think it will help the democratization process in Cuba. The more the American example is there, I think the more chance that that country will democratize.”

Still, horrific memories of the situation in Cuba remain fresh for some.

As CBS2’s Lou Young reported, John Donovan met former Cuban President Fidel Castro more than 50 years ago, and remembers the long history of struggle between the two countries. Back then, it was a mission to secure the release of U.S. citizens captured during the ill-fated invasion of Cuba at the Bay of Pigs.

Donovan was just a diplomat’s son – a teenager brought along to assure Castro there would be no assassination attempt on the car trip.

He said he went from “Varadero down to the Bay of Pigs on the south coast” in a car with Castro, and that he was himself a hostage in a way.

After the revolution, generations of Cubans left the island and came to the U.S., never to return. Some settled in Miami, others in Union City, New Jersey.

And while some were ready to move on, many others were not.

“I think it’s a disgrace,” said Miguel Perez of Union City.

But Maritza Rodriguez of Union City countered, “It’s better for the country of Cuba, because they’ll get some more support.”

U.S. officials said Cuba was taking some steps as part of the agreement to address its human rights issues, including freeing 53 political prisoners.

Cuba also released a non-American U.S. intelligence “asset” along with Gross. Officials said the spy had been held for nearly 20 years and was responsible for some of the most important counterintelligence prosecutions that the United States has pursed in recent decades. That includes convicted Cuban spies Ana Belen Montes, Walter Kendall Myers and Gwendolyn Myers and a group known as the Cuban Five.

The three Cubans released in exchange for the spy are part of the Cuban Five — a group of men who were part of the “Wasp Network” sent by Cuba’s then-President Fidel Castro to spy in South Florida. The men, who are hailed as heroes in Cuba, were convicted in 2001 in Miami on charges including conspiracy and failure to register as foreign agents in the U.S.

Two of the Cuban Five were previously released after finishing their sentences.

Gross, 65, has been imprisoned for five years in Cuba. He arrived at Joint Base Andrews in Maryland Wednesday after being released on humanitarian grounds by the Cuban government at the request of the Obama administration. He was accompanied by his wife, Judy, along with three U.S. lawmakers.

Speaking in Washington after his return, Gross said he learned the lesson during five years in Cuban captivity that freedom is not free. He said knowing he wasn’t forgotten by people in the U.S. was crucial to his survival.

“I’m incredibly blessed finally to have the freedom to resume a positive and constructive life,” he said.

Gross said he hopes the U.S. and Cuba can now move beyond their mutually belligerent policies. He said two wrongs never make a right.

Obama administration officials have considered Gross’ imprisonment an impediment to improving relations with Cuba.

“This is game-changing, which I fully support,” Gross said.

Wednesday’s announcements follow more than a year of secret talks between U.S. and Cuban officials in Canada and the Vatican. U.S. officials said Pope Francis was personally engaged in the process and sent separate letters to Obama and Castro this summer urging them to restart relations.

Gross was detained in December 2009 while working to set up Internet access as a subcontractor for the U.S. government’s U.S. Agency for International Development, which does work promoting democracy in the communist country. It was his fifth trip to Cuba to work with Jewish communities on setting up Internet access that bypassed local censorship.

Bonnie Rubinstein, Gross’ sister, heard the news from a cousin, who saw it on television.

“We’re like screaming and jumping up and down,” she said in a brief telephone interview from her home in Texas.

Cuba considers USAID’s programs illegal attempts by the U.S. to undermine its government, and Gross was tried and sentenced to 15 years in prison.

In a statement marking the fifth anniversary of Gross’ detention earlier this month, Obama hinted that his release could lead to a thaw in relations with Cuba.

“The Cuban Government’s release of Alan on humanitarian grounds would remove an impediment to more constructive relations between the United States and Cuba,” Obama said in a statement.

Gross’ family has said he was in ailing health. His wife, Judy, said in a statement earlier this month that Gross has lost more than 100 pounds, can barely walk due to chronic pain, and has lost five teeth and much of the sight in his right eye. He has begun refusing to see his wife and daughter, the new chief of the U.S. Interests Section in Havana and members of Cuba’s small Jewish community, who had been visiting him on religious holidays.

Obama has taken some steps to ease U.S. restrictions on Cuba after Raul Castro took over as president in 2010 from his ailing brother. He has sought to ease travel and financial restrictions on Americans with family in Cuba, but has resisted calls to drop the embargo.

Obama and Raul Castro shook hands and exchanged pleasantries last year while both attended a memorial service in South Africa for Nelson Mandela.

The surprise prisoner swap has echoes of the deal the U.S. cut earlier this year to secure the release of Army Sgt. Bowe Bergdahl, who had been held by the Taliban. In exchange for his release in May, the U.S. turned over five Taliban prisoners held at the Guantanamo Bay detention center.

You May Also Be Interested In These Stories:
[display-posts category=”news” wrapper=”ul” posts_per_page=”4″]

(TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)