The memorandum, signed by Sigmar Gabriel (above, center) at the start of his two-day trade visit on Thursday, could prove to be beneficial to German businesses seeking to invest in Cuba, and potentially increase the current 225 million euros ($244.22 million) in annual bilateral trade.

Speaking at the launch of a forum of German businesses and Cuban government officials, Gabriel said the deal marked "the start of a very dynamic process for our bilateral economic relations."

"Part of this process will also surely be to modernize our political relations," the vice chancellor added.

"There were difficult times for economic and political cooperation, and now is a good time to change that."

Echoing Gabriel's sentiments, Cuba's foreign trade minister, Rodrigo Malmierca, said he too saw "great potential" to strengthen ties as Cuba reforms its economy.

Cold War tensions

Prior to the reunification of Germany in 1990, West Germany was a rival of Communist Cuba, with Havana a staunch ally of the Soviet-controlled East.

Over the past 25 years relations have thawed, and Germany is now Cuba's fourth-biggest European trade partner. In 2014, their bilateral trade was worth $378 million.

After Canada, Germany is also Cuba's second-biggest source of foreign tourists in the world. Between January and November last year, more than 154,000 Germans visited the island.

Global attention

Following its historic move to restore diplomatic ties with the US last year, Cuba is quickly gaining interest from companies around the globe.

During his visit, Gabriel was due to meet with his Cuban counterpart Miguel Diaz-Canel and other cabinet ministers. Also on the agenda was a visit to gas-bottling Oxicuba S.A., where German industrial gases supplier Stefan Messer GmbH has been involved in a joint venture with the Cuban government since 2001.

ksb/rc (Reuters, AFP)