A woman walks past a bicycle taxi with the U.S. and Cuban flags in Havana December 17, 2014.

Bells tolled in celebration and teachers halted lessons midday as President Raul Castro told his country Wednesday that Cuba was restoring relations with the United States after more than a half-century of hostility.

Wearing his military uniform with its five-star insignia, the 83-year-old leader said the two countries would work to resolve their differences “without renouncing a single one of our principles.”

Havana residents gathered around television sets in homes, schools and businesses to hear the historic national broadcast, which coincided with a statement by U.S. President Barack Obama in Washington. Uniformed schoolchildren burst into applause at the news.

At the University of San Geronimo in the capital’s historic center, the announcement drew ringing from the bell tower. Throughout the capital, there was a sense of euphoria as word spread.

“For the Cuban people, I think this is like a shot of oxygen, a wish-come-true, because with this, we have overcome our differences,” said Carlos Gonzalez, a 32-year-old IT specialist. “It is an advance that will open the road to a better future for the two countries.”

Guillermo Delgado, a 72-year-old retiree, welcomed the announcement as “great news.”

“It is a victory for Cuba because it was achieved without conceding basic principles,” Delgado said. “For Obama, I think it’s a spectacular step. … All countries should change this irrational policy.”

Fidel and Raul Castro led the 1959 rebellion that toppled the dictatorship of Fulgencio Batista. The U.S. initially recognized the new government but broke relations in 1961 after Cuba veered sharply to the left and nationalized U.S.-owned businesses.

As Cuba turned toward the Soviet Union, the U.S. imposed a trade embargo that has remained in place since 1962. Particularly since the collapse of the USSR in 1991, Cubans have confronted severe shortages of oil, food and consumer goods, forcing them to ration everything from beans to powdered milk.

The Cuban government blames most of its economic travails on the embargo, while Washington has traditionally blamed Cuba’s Communist economic policies.

Obama had already loosened some travel, trade and financial restrictions that have boosted remittances to an estimated $2 billion annually, while Castro has ushered in some significant free-market reforms, opening the door to private businesses. The result has been more opportunities for some, and more goods available for those who can pay.

While the measures announced Wednesday don’t include a lifting of the trade embargo, Cubans hope they will see more tourists and more hard cash.

“This opens a better future for us,” aid Milagros Diaz, 34. “We have really needed something like this because the situation has been bad and the people very discouraged.”

In his address, Castro called on Washington to end its trade embargo which, he said, “has caused enormous human and economic damage.”

Cuba is willing to discuss the great differences that remain on matters of national sovereignty, democracy and internal policies, he said. “We should learn the art of living together in a civilized manner in spite of our differences.”

The announcement resulted from secret U.S.-Cuba negotiations, which Castro said had been facilitated by the Vatican and the Canadian government. He expressed gratitude to each, “especially Pope Francis.”

Havana resident Gabriel Serrano said, “Raul, Fidel, Obama and the pope are covered with glory. … I’m 71 years old and this is news that I’ve waited so long for.”

The streets remained calm across Havana, but a mood of celebration was palpable. At the University of Havana, a spontaneous celebration erupted with students leaving their classrooms waving Cuban flags and singing.

Around the cathedral in Old Havana, people gathered in doorways and on sidewalks, gesturing excitedly as they discussed the news.

“Did you hear Raul?” one person asked. “What great news!” exclaimed another.

Diego Moreno, 58, said it was more than he’d expected.

“Finally, the reason and sensibility of both countries has triumphed.”

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