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Cruise Line Shares Sail Higher as U.S., Cuba Relations Improve

Carnival's Breeze cruise ship stands docked prior to departure in Miami, Florida on March 9, 2014.
Carnival's Breeze cruise ship stands docked prior to departure in Miami, Florida on March 9, 2014. Bloomberg—Bloomberg via Getty Images

Investors place bet on cruise operator shares even though tourism is still banned

Shares of cruise-line operators sailed to big gains on Wednesday as investors placed a bet that improving relations between the U.S. and Cuba could lead to new opportunities for tourism.

Shares of Carnival, Norwegian Cruise Line and Royal Caribbean all rose in early trading Wednesday, outpacing the Dow Jones Industrial Average, after the Obama administration said it plans to lift many of its existing travel restrictions on Cuba.

The new regulations will make it easier for Americans to visit to Cuba under the 12 categories of travel that are currently allowed, The Wall Street Journal reported, though it isn’t immediately clear if or when the island will be open for mass tourism. Some kinds of tourism are still banned, according to various media reports,.

Still, Cuba is appealing to companies with the most to gain from the increased travel. The tropical island’s attractive beaches and proximity to the United States makes it a potential vacation hotspot. The Caribbean is already the largest cruise line market in the world, and Americans hop on the industry’s bulky ships more than any other nation.

Some of the cruise line operators already have strong links to the Caribbean. For example, nearly all of Norwegian’s ships serve the region. The Caribbean also makes up roughly 35% of Carnival’s passenger capacity, more than any other region. That means that if the U.S. were to allow its citizens to freely visit Cuba, many of the cruise industry’s ships are already in prime position to dock at Havana and other Cuban cities.

This article originally appeared on Fortune.com

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Why Did the U.S. and Cuba Sever Diplomatic Ties in the First Place?

Fidel Castro cover
The Jan. 26, 1959, cover of TIME Cover Credit: BORIS CHALIAPIN

Diplomacy between the two neighbors has been strained for decades

On Wednesday, U.S. President Obama and Cuban President Raul Castro announced that the two nations are on their way to restoring diplomatic relations. Obama, speaking of the change, said that the two nations are not served by a policy rooted in events that took place a half century ago.

But what exactly did happen back then?

It was actually over half a century ago that Fidel Castro led Cuban rebels against Cuba’s strongman leader Fulgencio Batista, if you count from when Castro led revolutionaries to the island in late 1956. (He had been involved in anti-Batista efforts for several years before that, too.) Though early reports on the movement speak of Castro and his supporters as underdogs with no hope of victory, as 1959 dawned, they proved victorious. America watched with interest, but it wasn’t long before it became clear that Castro’s Cuba would not be an easygoing neighbor to the United States.

As Castro purged Cuba of Batista supporters, he declined to institute the democratic reforms that many had hoped for. Initially, the revolution had not been overtly Communist, but Castro moved further toward that ideology as his rule went on. In the middle of 1959, he instituted wealth-distribution and land-confiscation programs; that July, TIME reported that a former Cuban official had said that “Cuba’s No. 1 Communist… is Fidel himself.”

In a Cold War world, the rise of Communism in a nation so close to Florida was not taken lightly. Though the U.S. ambassador to Cuba, Philip W. Bonsal, did finally manage to meet with Castro that September, their discussions — partly concerned with arrests of U.S. citizens in Cuba and the government confiscation of some U.S. investments in Cuba — proved fruitless.

In the United Nations, Cuba began to stand with Communist nations against the U.S.; in Cuba, the ruling regime encouraged anti-U.S. sentiments; in early 1960, the U.S.S.R. instituted a trade-and-aid deal with Cuba; U.S. sugar producers pushed for the nation to stop buying sugar from Cuba; Castro accused the U.S. of sabotaging a ship that blew up in Havana’s harbor. The details of changes in Cuba and the U.S. reaction to those developments are complicated and often conflicting, but suffice it to say that TIME called that period a “rapidly deteriorating situation that sees Cuban-American relations reach a new low each day.”

Eventually, in late October of 1960, the U.S. imposed a strict embargo barring two-thirds of American imports from Cuba, which before then had been buying a whopping 70% of its imports from the United States. As the two nations sparred over economics, Ambassador Bonsal was recalled from Cuba, after which point both embassies — Cuba’s in D.C. and America’s in Havana — were left to be headed by chargés, which meant, TIME pointed out, that “diplomacy between the two nations will become as difficult as commerce.”

In the weeks that followed, as rumors of a possible invasion by the U.S. spread throughout Cuba, people began to line up at the U.S. embassy seeking visas to leave the island. The daily lines became an embarrassment to the Castro regime but the rumors only increased as time went on. When Castro later demanded that the two countries have the exact same number of staffers in their respective embassies (11), the U.S. brought its entire staff home instead.

The crowds were still waiting when, early in January of 1961, the embassy closed its doors; there were more than 50,000 visa applications on file at the time. As TIME reported:

The crowd of desperate Cubans swarming around the U.S. embassy in Havana refused to believe that the doors were locked and that no more visas could be issued. One man hammered on the glass, waving his U.S. Army discharge papers. A woman with a broken leg was held up piteously to the scurrying U.S. staff workers inside. “But you are the humane people! You are the humane people!” a woman pleaded, grabbing a U.S. consular official as government photographers stood near snapping pictures of those who wanted to flee Castro’s Cuba.

The U.S. could not help them—at the moment. After two years of harassment. President Eisenhower ordered the State Department to break all diplomatic ties, at both the embassy and consular level, for the first time in the history of U.S.-Latin American relations. To most Americans the wonder was that the U.S. had stood it so long.

The only place in Cuba where a U.S. presence remained would be the naval base at Guantanamo Bay; a few weeks later, the U.S. announced a decision to all end travel to Cuba. Early 1961 proved to be the end of one phase of U.S.-Cuba relations, and the beginning of another, more openly combative, phase — and this week may well mark the beginning of the next.

Read TIME’s 1959 cover story about Fidel Castro’s rebellion, here in the TIME Vault:

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