U.S. President Barack Obama announced a major shift in U.S. relations with Cuba on Wednesday, after the country’s communist leaders released Alan Gross, an American who had been imprisoned there for five years.

Obama and Cuban President Raul Castro, in simultaneous speeches from Washington and Havana, said they had exchanged American and Cuban prisoners each had held for years. They will also open a path to increased economic and travel ties between the two countries, ending more than a half-century of diplomatic isolation borne in the Cold War.

Obama Announces Historic Revamp of US-Cuba Relations

"Isolation has not worked. It's time for a new approach," Obama said, in explaining the move toward normalizing relations. "I believe this contact will do more to empower the Cuban people."

Obama Announces Historic Revamp of US-Cuba Relations

In lauding the move, Castro said, "We have decided to re-establish diplomatic relations" with the U.S.

Obama Announces Historic Revamp of US-Cuba Relations

He said, "This decision by President Barack Obama deserves respect and recognition by our people," but he also called for a complete end to the U.S. economic blockade.

The two leaders talked by phone for more than 45 minutes on Tuesday, the first substantive presidential contact between the U.S. and Cuba since 1961.

Later Wednesday, Gross made a short statement in Washington. He said he had learned of his impending release on Tuesday. He said he was happy to be home and that he was thankful for all those who worked for his release.

Obama said Gross and a man described as "one of the most important (U.S.) intelligence agents" were exchanged for three Cuban intelligence operatives who had spent more than a decade in U.S. prisons.

Talks for Gross' release lasted about a year, with the Vatican playing a significant role, Democratic Senator Dick Durbin said Wednesday.

Both Obama and Castro thanked Pope Francis, the first Latin American pontiff, in starting a dialogue between the two countries.

The Vatican replied on Wednesday that, in recent months, Francis had written letters to both leaders, inviting them to “resolve humanitarian questions of common interest, including the situation of certain prisoners, in order to initiate a new phase in relations” between the two countries.

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The two countries are expected in the coming weeks to negotiate an agreement to lead both countries to opening embassies in each other's capitals.

Obama said business and travel ties will be launched, but that he will have to negotiate with the U.S. Congress over ending the country's economic blockade against Cuba.

Also, the U.S. Treasury said in the coming weeks that financial sanctions on Cuba will be amended. And the U.S. will unfreeze U.S. bank accounts of Cubans who no longer live in Cuba, the White House said.

Obama has also asked Secretary of State John Kerry to review Cuba's designation as a state sponsor of terrorism. "This review will be guided by the facts and the law," he said. "A nation that meets our conditions and renounces the use of terrorism should not face this sanction.''

Kerry said that he would travel to Cuba at some point in the future. "I look forward to being the first Secretary of State in 60 years to visit Cuba," Kerry said in a statement.

Assistant Secretary of State for the Western Hemisphere Roberta Jacobson will travel to Cuba in January to discuss the renewal of diplomatic relations, he added.

"As we did with Vietnam, changing our relationship with Cuba will require an

investment of time, energy and resources," Kerry said.

In the coming months the U.S. also will work with Cuba on such issues as migration, counternarcotics, human trafficking and the environment.

In responding to Obama, U.S. House Speaker John Boehner said, “Relations with the Castro regime should not be revisited, let alone normalized, until the Cuban people enjoy freedom - and not one second sooner. … If anything, this emboldens all state sponsors of terrorism. …”

However, Boehner said he felt “great joy and relief for Alan Gross and his family.”

U.S. Republican Senator Marco Rubio of Florida, a Florida Republican who is Cuban-American, said, “The White House has conceded everything, but gained little."

It is Cuba’s human rights record that has kept the administration from moving to strengthen relations and possibly ease or lift the embargo.

U.S. Senator Bob Corker, who will lead the Senate Foreign Relations Committee in the new Congress, said Wednesday he wanted to know more about what Cuba would do in return for any shift in U.S. policy and will “closely examine” the issue.