US-Cuba reach flight deal to jumpstart lagging business ties

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US and Cuba Reach Airline Deal

HAVANA (AP) -- The United States and Cuba have struck a deal to restore regular airline flights, jumpstarting economic relations that have languished despite a year of rapid progress on the diplomatic front, U.S. and Cuban officials said Thursday on the anniversary of detente between the Cold War foes.

The deal reached Wednesday night after three days of talks in Washington opens the way for U.S. airlines to negotiate with Cuba's government for routes that could bring thousands more visitors a day to the island. The reestablishment of commercial U.S. flights to Cuba after half a century would be the biggest business development since the two countries began normalizing relations last year.

SEE ALSO: A year in, detente with US reshapes Cuba's psychic landscape

The State Department said Thursday that the deal allowed the establishment of scheduled air service and the continuation of the charter flights that are currently the only way of flying directly between the U.S. and Cuba.

The United States and Cuba publicly say they're delighted with the state of diplomatic relations a year after Presidents Barack Obama and Raul Castro declared the end to more than 50 years of official hostility. The two countries have reopened embassies in Havana and Washington; agreed to a pilot program restarting direct mail service; signed two deals on environmental protection; and launched talks on issues from human rights to compensation for U.S. properties confiscated by Cuba's revolution.

The U.S. Secretaries of state, commerce and agriculture and the Cuban-born deputy secretary of homeland security have all made official visits to start discussions on unsexy but vital technical matters like produce inspection and port regulations.

Sports and cultural activity is heating up too. Havana has been swamped by U.S. celebrities. Several music promoters are jostling to hold the first major U.S. pop concert in the capital early next year. Major League Baseball stars including Cuban-born defectors Yasiel Puig and Jose Abreu were warmly welcomed by the Cuban government this week on a goodwill trip meant to pave the way for spring training games in Cuba in 2016.

Check out these images of Old Cuba:

Old Cuba
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US-Cuba reach flight deal to jumpstart lagging business ties
New skyscrapers, multi-million dollar hotels and apartment buildings are rising like magic along Havana's famed Malecon Sea Boulevard bordering the Gulf of Mexico, January 23, 1958. This aerial view shows Hotel Nacional de Cuba, one of first modern hotels erected 27 years ago (left, foreground, whitefaced) the new $6,000,000 Hotel Capri, directly behind the Nacional; a string of new ultra modern apartment buildings, to right of Nacional; the US Embassy (first building at right next to the sea); and new $14,000,000 Hotel Riviera (second building, right, at top of photo.) (AP Photo)
A view of the new U.S. Embassy, in Havana, Cuba, with its garden in the foreground, which has been built on the outskirts of Havana on a hill overlooking the sea, is shown April 24, 1942. The two-story stone mansion, which will be occupied by the new American ambassador to Cuba Spruille Braden when he arrives here, was constructed at a cost of $300,000. It has eight master bedrooms, seven master baths, four dressing rooms, great reception, living and dining rooms, besides three kitchens and service pantries, porches, terraces and servants quarters. (AP Photo/La Prensa)
General view of international Casino in Hotel Nacional De Cuba in Havana, October 1, 1958. This is one of the ten big casinos in Cuba whose operations now are in hands of North American gambling interests. (AP Photo)
Patron's of Havana's gambling rooms are divided about evenly between tourists from the United States and Cubans. Gamblers are shown here tbetting at the Roulette Wheel, February 9, 1956. (AP Photo)
CUBA - JANUARY 01: In the 1960's in Cuba, tractors and agricultural machines harvesting the sugar cane. This modern equipment facilitates the mechanization of Cuban agriculture. In spite of a planned economy installed in 1961, Cuba, number one world exporter of sugar, maintained its agricultural priorities from the previous period. (Photo by Keystone-France/Gamma-Keystone via Getty Images)
Fidel Castro is pictured at the front during the Bay of Pigs invasion in this 1961 photo. (AP PHOTO)
Among scores of Cubans trying frantically to obtain a U.S. visa before the American embassy closed was this Cuban-American who brought along a framed World War II certificate with his passport in Havana, Jan. 4, 1961. (AP Photo)
A view from the presidential palace to the entrance to Havana Bay, showing segments of the huge crowd of workers and peasants who heard and cheered Fidel Castro in Havana, Oct. 26, 1959. Crowd estimates ran upward to 400,000 with Cuban radio announcers claiming a million. Statue at top center is that of Maximo Gomez. (AP Photo)
View of 23rd St. in Havana, July 15, 1964. (AP Photo)
An exterior view of the Cran-Casino-Nacional Casino is shown in Havana, Cuba in an undated photo.(AP Photo)
A view of the Hotel National from the Gulf of Mexico side is shown in Havana, Cuba on Sept. 27, 1957.(AP Photo/Harold Valentine)
This aerial view shows downtown Havana, Cuba, Jan. 1958. At left is Central Park, bordering the Prado street and at center, right, is Cuba's Capitol Building. (AP Photo)
View of Malecon Drive as seen from the roof of the Nacional Hotel looking toward the heart of the city, Feb. 15, 1946. (AP Photo/Charles Kenneth Lucas)
Stampeded by Fidel Castro's orders for the U.S. embassy to reduce its staff to 12 officials within 48 hours, scores of Cuban nationals flocked to the American diplomatic mission's headquarters in hopes of obtaining a visa. The visa section was closed as the embassy made preparations to cut its staff in Havana, Jan. 3, 1961. This is but a small portion of the crowd around the embassy. (AP Photo)
Fidel Castro's speech in La Habana. (Photo by: Photo12/UIG via Getty Images)
General view of Havana shown in September 1968 with this street scene leading to El Capitolio, now a national museum used as a meeting place for visiting foreign dignitaries to Cuba. (AP Photo)
This is the modernistic, $15 million Hotel Riviera, one of the newest in the string of luxury hotels dotting the Malecon Boulevard skyline in Havana, Cuba, Sept. 24, 1958. This is a view of the front entrance of the hotel, built by U.S. interests. The dome-shaped structure at the right is the Riviera's gold-leafed gambling casino. (AP Photo)
(GERMANY OUT) Cuba : Hemingway, Ernest *21.07.1899-02.07.1961+ Writer, USA Winner of the nobel prize for literature 1954 - Hemingway's former house 'Finca Vigia' in San Francisco de Paula near Havana, Cuba, today a museum; exterior view - 1971 - Photographer: ullstein - Kanus (Photo by Kanus/ullstein bild via Getty Images)

But there has been virtually no progress on business ties, a major part of Obama's new policy on Cuba. When he unveiled that policy on Dec. 17, 2014, Obama delivered a glowing vision of American visitors using debit and credit cards made possible by new banking links. U.S. companies would export a wide range of goods including telecommunications equipment.

Almost none of that has happened.

Sprint and Verizon have signed roaming deals with Cuba's state telecommunications company that benefit a small class of well-heeled American travelers. The online home-sharing service Airbnb has started operations in Cuba but hasn't allowed non-Americans to book lodging, making it irrelevant for the majority of travelers from Europe and Canada.

"On the political and diplomatic plane, and in bilateral cooperation, we've seen important progress," Vidal said. "In contrast, I have to say that in the area of economy and commerce the results are barely visible."

U.S. travel from Cuba is up more than 50 percent from last year even though flying today requires wrangling with charter airlines that are expensive and difficult to book. Travelers from Cuba must brave long, chaotic lines to buy paper tickets. In the U.S., they are forced to email documents and payment information back and forth with an agent in the absence of online booking. The State Department statement did not explain how the countries envisioned the continuation of charter service alongside regularly scheduled flights.

The return of commercial flights appears certain to create a surge in travel that would place heavy strain on Cuba's already overstrained tourist infrastructure. Hotels and private hostals are booked for months.

That's making many Cubans relatively well-off but those still earning meager state salaries and waging daily struggles to find scarce and expensive products express a rising sense of impatience and dissatisfaction.

"I haven't seen more commerce, really. I haven't seen products in the stores," said Paloma Suarez, a 50-year-old office worker in a state-run company in Old Havana.

The U.S. has expressed disappointment with what it calls Cuba's unwillingness to cooperate with executive actions such as allowing U.S. exports to the Cuban private sector and sales of equipment to the Cuban state telecommunications company. Vidal said much of the blame lay with the Obama administration's unwillingness, so far, to take bolder steps to loosen the U.S. trade embargo on Cuba.

"There are very few things that, under the law, the president definitely can't change," Vidal said, calling on Obama to allow the Cuban government to use dollars in international transaction and export goods to the U.S., among other measures.

U.S. companies trying to do business in Cuba say bureaucrats have welcomed their proposals in friendly face-to-face meetings but months later there still is no concrete "yes" or "no."

In the U.S., banks afraid of running afoul of the embargo have been blocking legal Cuba-related transactions at rates equal to or higher than before Obama's announcement. And U.S. businesses eager to launch projects in Cuba say federal regulators are meeting many requests for licenses with confusion or silence.

Cuban officials have declared themselves ready to do work with Oggun, an Alabama-based two-man firm that wants to build affordable, easy-to-repair tractors mostly for private Cuban farmers. The company believes its plans comply with both the letter and spirit of Obama's new policy.

They say they have gotten encouraging words from the State Department but the Treasury Department's financial regulators have frozen them in place.

"All we get is, 'your application is still pending,"" Oggun co-founder Horace Cleber said. "It's been six months that it's been in the process."

Watch this video of Pope Francis' visit to Cuba:

Pope Arrives in Cuba

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