Obama opens crack in U.S. embargo against Cuba

By Matt Spetalnick

WASHINGTON (Reuters) - President Barack Obama opened a crack on Monday in a decades-old U.S. embargo against communist Cuba, allowing American telecommunications firms to start providing service for Cubans and lifting restrictions on family ties to the island.

In a major shift from the Bush administration's hard-line approach to Havana, Obama ended limits on family travel and money transfers to their homeland by Cubans in the United States.

The moves by the White House do not eliminate Washington's trade embargo against Cuba, set up 47 years ago, but they do hold out the prospect for improving relations between the two longtime foes.

"The president has directed that a series of steps be taken to reach out to the Cuban people to support their desire to enjoy basic human rights," said White House spokesman Robert Gibbs. "These are actions he has taken to open up the flow of information."

U.S. officials said Obama hoped the new measures would encourage Cuba's one-party state to implement democratic reforms long demanded by Washington as a condition for removing sanctions imposed after Fidel Castro took power in 1959.

Shares of companies that stand to gain from a thaw in U.S. ties with Cuba soared on the news, led by Canadian mining and energy company Sherritt International, a major player in Cuba's nickel and oil industry, whose stock rose 24.5 percent.

Miami-based cruise operator Royal Caribbean also saw its shares rise on hopes that the No. 2 cruise ship operator and rival Carnival, could sail to Cuba, just 90 miles from the United States.

U.S. telecommunications companies will now be allowed to set up fiber-optic cable and satellite links with Cuba, start roaming service agreements and permit U.S. residents to pay for telecoms, satellite radio and television services provided to people in Cuba, the White House said.

Obama also directed his government to look at starting regularly scheduled commercial flights to Cuba. Air travel between the United States and Cuba is now limited to charter flights.

While they insistently call for an end to the U.S. embargo Cuba's leaders have in the past reacted with caution and suspicion to initiatives presented by Washington as seeking to "open up" Cuba's communist political system.

Havana rejects arguments that it needs Western-style democracy and has resisted as "subversive" past U.S. efforts to channel funds and communications equipment to dissidents and independent journalists on the island.

PRAISE AND CRITICISM

Supporters of easing U.S. sanctions against Cuba applauded the family-related policy changes, which will affect an estimated 1.5 million Americans who have relatives in Cuba.

They voiced hope it would lead to even bolder steps by Obama to dismantle the trade embargo, which critics argue is an obsolete policy that has failed to foster change in Cuba.

But conservative critics of Obama's strategy said it would increase cash flow to help prop up Cuba's government.