WASHINGTON (Reuters) - Five decades after Fidel Castro toppled a U.S.-backed dictator to take power in Cuba, the Cold War rivalry with Washington could be thawing as President-elect Barack Obama looks to ease sanctions against the communist-run island.
Obama has made clear he favors relaxing restrictions on family travel and cash remittances by Cuban Americans to Cuba, which this week marks the 50th anniversary of Castro's revolution.
Obama could also reverse other steps taken by outgoing President George W. Bush to tighten sanctions on Cuba, such as the prepayment of food imports from the United States, and he is expected to restore migration talks broken off by Bush.
Experts on Cuba believe modest changes in policy will come quickly, but stop short of lifting the trade embargo first imposed in 1962 or allowing all Americans to travel to the island 90 miles off the coast of Florida.
Obama, who takes office on January 20, will be the 11th U.S. president to deal with the Cuban revolution in a dispute that has outlived the Cold War and took the world to the brink of nuclear war during the 1962 Soviet missile crisis.
On the campaign trail, Obama said the embargo should stay in place to press for democratic reforms in Cuba, but he said he was open to dialogue with the Cuban leadership.
Cuba has welcomed Obama's proposals as a good first step and President Raul Castro, who took over from his older brother Fidel Castro early this year, has offered to free political dissidents in exchange for the release of five convicted Cuban spies in U.S. prisons as "gestures" to help set up a meeting with Obama.
While such an exchange is unlikely and Obama will not end the embargo without major concessions from Castro, his arrival is seen by some as opening a window of opportunity for improved relations at a time of political transition in Cuba.
"The potential for change is more real than ever," said Katrin Hansing, associate director at the Florida International University's Cuban Research Institute.
An FIU poll conducted in November showed that 55 percent of Cuban Americans in Miami, an anti-Castro bastion that has long backed a hard-line U.S. stance on Cuba, now favor lifting the 46-year-old trade embargo.
Cuba watchers agree the embargo has failed to bring about political change in Cuba, like earlier CIA efforts to assassinate or overthrow Fidel Castro, who retired in February due to illness but still wields power behind the scenes.
Experts say Obama may want to move quickly on Cuba in order to send a clear signal of change in U.S. policy toward Latin America, where U.S. influence has declined under Bush and where the embargo against Cuba is very unpopular.
Obama will meet Latin American and Caribbean leaders in April at a summit meeting in Trinidad and Tobago.
BUSINESSES PUSH FOR CHANGE
Some U.S. businesses are banking on a better climate for trading with Cuba, which has bought $2.6 billion in U.S. food since Congress approved an exception to the embargo in 2000.
In a letter to Obama this month, a coalition of business, agriculture and trade groups called USA*Engage said it was time for a new Cuba policy and proposed lifting all sanctions and allowing American tourists to travel to Cuba.
The coalition --which includes the American Farm Bureau Federation, the Grocery Manufacturers Association and the National Retail Federation -- called for an immediate exemption for the sale of farm machinery and heavy equipment to Cuba.
"We support the complete removal of all trade and travel restrictions on Cuba," it said. "The United States could engage in bilateral discussions with the Cuban government."
It further proposed that Obama license direct banking services with Cuba, a major obstacle of the embargo that pushes up the cost of doing business with Cuba.
The Cuba Study Group, a moderate organization funded by Cuban American businessmen, has also recommended lifting all travel restrictions and allowing remittances by any U.S. citizen as a way to "strengthen the internal pro-democracy movement" in Cuba.
Carlos Saladrigas, a businessman and founder of the group, believes the best way to promote change in Cuba is through U.S. tourism.
"We should allow the forces of American culture creep into Cuba and then let the Cubans be the agents of their own change. That would put the Cuban government on the spot," he said.
Saladrigas said the U.S. president has wide discretionary powers to engage Havana, even to restore the diplomatic ties severed by President Dwight Eisenhower in 1961, and allow Cuba back into the International Monetary Fund and the World Bank.
But lifting the travel ban requires Congressional action and that would be difficult to get passed without clear signs from Cuba that political reforms are forthcoming, he said.
"Is the Cuban government really interested in significant change? I really do not see it."
(Reporting by Anthony Boadle; Editing by Kieran Murray)