WASHINGTON — President Barack Obama announced the re-establishment of diplomatic relations as well as an easing in economic and travel restrictions on Cuba Wednesday, declaring an end to America’s “outdated approach” to the communist island in a historic shift that aims to bring an end to a half-century of Cold War enmity.

“Isolation has not worked,” Obama said in remarks from the White House. “It’s time for a new approach.”

As Obama spoke, Cuban President Raul Castro addressed his own nation from Havana. Obama and Castro spoke by phone for more than 45 minutes Tuesday, the first substantive presidential-level discussion between the U.S. and Cuba since 1961.

Obama’s announcement marked an abrupt use of executive power. However, he cannot unilaterally end the longstanding U.S. economic embargo on Cuba, which was passed by Congress and would require action from lawmakers to overturn.

Wednesday’s announcements followed more than a year of secret talks between the U.S. and Cuba. The re-establishment of diplomatic ties was accompanied by Cuba’s release of American Alan Gross and the swap of a U.S. spy held in Cuba for three Cubans jailed in Florida.

Obama said Gross’ five-year imprisonment had been a “major obstacle” in normalizing relations. Gross arrived at an American military base just outside Washington Wednesday morning, accompanied by his wife and a handful of U.S. lawmakers. He went immediately into a meeting with Secretary of State John Kerry.

As part of resuming diplomatic relations with Cuba, the U.S. will soon reopen an embassy in the capital of Havana and carry out high-level exchanges and visits between the governments. The U.S. is also easing travel bans to Cuba, including for family visits, official U.S. government business and educational activities. Tourist travel remains banned.

Licensed American travelers to Cuba will now be able to return to the U.S. with $400 in Cuban goods, including tobacco and alcohol products worth less than $100 combined. This means the long-standing ban on importing Cuban cigars is over, although there are still limits.

The U.S. is also increasing the amount of money Americans can send to Cubans from $500 to $2,000 every three months. Early in his presidency, Obama allowed unlimited family visits by Cuban-Americans and removed a $1,200 annual cap on remittances. Kerry is also launching a review of Cuba’s designation as a state sponsor of terror.