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US-Cuba trade and travel ease starts today

Published:Friday | January 16, 2015 | 1:00 AM

WASHINGTON (AP):The BARACK Obama administration is putting a large dent in the United States embargo against Cuba today, significantly loosening restrictions on American trade and investment.

The new rules also open up the Caribbean island to greater American travel and allow US citizens to start taking home small amounts of Cuban cigars, lifting a ban imposed more than half a century ago.

The new Treasury and Commerce Department regulations announced yesterday are the next step in President Barack Obama's plan to re-establish diplomatic relations with Cuba. They come three days after US officials confirmed the release of 53 political prisoners Cuba had promised to free.

Only Congress can end the five-decade embargo. But the measures give permission for Americans to use credit cards in Cuba and US companies to export telephone, computer and Internet technologies. Investments in some small business are permitted. General tourist travel is still prohibited, but Americans authorised to visit Cuba need no longer apply for special licences.

Obama announced last month that he would soften the embargo and begin restoring diplomatic ties with Havana, saying, "These 50 years have shown that isolation has not worked."

MONTHS OF SECRET TALKS

The deal was the product of 18 months of secret talks that culminated in the exchange of imprisoned spies and release of Alan Gross, a US government contractor who had been imprisoned in Cuba for five years.

The few US companies facilitating travel to Cuba say enquiries have exploded since December. American visits could triple this year, from about 90,000 annually.

"We're hiring more people, we've secured more hotel rooms and assets in Cuba to provide additional travel," said Tom Popper, president of New York-based insightCuba.

With the new regulations public, the focus shifts to American businesses and the Cuban government. Some changes could take months as US firms analyse the risks and benefits of moving into a complicated new market. And the Cuban government has said nothing publicly about how it will regulate new trade with the United States. Foreign companies currently deal almost entirely with state-owned firms that are notoriously slow, inefficient and short on cash.

Cuba will likely be more open to a surge in new travellers than to other potential effects of the loosened rules.

But Cuban hotels generally fall short of international standards and those with better food and service are almost always fully booked during the winter high season.

"This is good news, but we're lacking infrastructure in hotels and in administration," said Maikel Gonzalez, a 34-year-old hotel receptionist. "American tourists are really demanding. How do I explain to one that the taxi didn't come because it doesn't have tyres or that there's no water in the rooms?"

Individual Cubans can legally rent out their homes or apartments - a potential source of thousands of rooms for travellers and a flood of funding for private citizens that would be largely outside state control.

Also casting a shadow on potential deals is the possibility of litigation by Cuban-Americans and US firms whose properties were confiscated in Fidel Castro's 1959 revolution and may try to sue companies entering into business with the Cuban government. In Washington, Congress may also seek to erect barriers to new investment.