WASHINGTON

- After a half-century of Cold War acrimony, the United States and Cuba moved yesterday to restore diplomatic relations - a historic shift that could revitalize the flow of money and people across the narrow waters that separate the two nations.

President Obama's dramatic announcement in Washington - seconded by Cuban President Raul Castro in Havana - was accompanied by a quiet exchange of imprisoned spies and the celebratory release of American Alan Gross, a government contract worker who had been held in Cuba for five years.

The shift in U.S.-Cuba policy was the culmination of 18 months of secret talks between the longtime foes that included a series of meetings in Canada and the personal involvement of Pope Francis at the Vatican. It also marked an extraordinary undertaking by Obama without Congress' authorization as he charts the waning years of his presidency.

"These 50 years have shown that isolation has not worked," Obama declared at the White House. "It's time for a new approach."

Obama spoke as Castro was addressing his nation in Havana, where church bells rang and school teachers paused lessons to mark the news. Castro said that while the U.S. and Cuba remain at odds on many matters, "we should learn the art of living together in a civilized manner in spite of our differences."

Obama's plans for remaking U.S. relations with Cuba are sweeping: He aims to expand economic ties, open an embassy in Havana, send high-ranking U.S. officials including Secretary of State John Kerry to visit and review Cuba's designation as a state sponsor of terrorism. The U.S. also is easing restrictions on travel to Cuba, including for family visits, official government business and educational activities. But tourist travel remains banned.