By Sarah Marsh and Matt Spetalnick
HAVANA/WASHINGTON, July 20 (Reuters) - Marking the one-year anniversary of the renewal of U.S.-Cuban diplomatic ties, the former Cold War foes said on Wednesday they were working hard on further deepening their detente this year, as the clock ticks down on the Obama administration.
Cuban and U.S. representatives will meet this week in Havana to sign a deal on fighting drug trafficking and hold further talks later this month in Washington on their countries' property claims against one another, a senior U.S. State Department official said.
"Normalization is a long term process ... but we are making slow and steady progress," the official, speaking on condition of anonymity, told reporters on a conference call.
While much remains to be done, the neighbors have made historic progress in forging closer ties over the past year that both sides were at pains to underscore on Wednesday.
They reopened embassies a year ago after more than five decades of estrangement and have since agreed on matters of common concern such as the resumption of direct mail service and U.S. commercial flights to Cuba.
U.S. President Barack Obama also made a historic trip to the island in March.
Yet the mood on the street in Havana was downbeat on Wednesday. The detente has raised Cubans' expectations yet their economic reality has worsened.
President Raul Castro warned Cubans earlier this month they would have to tighten their belts due to lower oil assistance from key ally Venezuela and a cash crunch as lower commodities prices hurt exports.
"I expected more since Obama's visit, but salaries are still low, the economy is blocked and more and more young people are choosing to emigrate," said Ricardo Fernandez, 34.
Cubans complain much of their economic troubles stem from the U.S. trade embargo. While Obama has made it clear he would like to lift this, his room for maneuver has been limited by the Republican-controlled Congress.
Josefina Vidal, the Cuban Foreign Ministry's chief of U.S. affairs, told state-run Granma newspaper Obama could still do "much more to make the process (of detente) irreversible" before the end of his term in January.
Nonetheless, she said a great deal of progress had been made in just a year, listing various agreements, and said more is expected in the coming months.
Relations would not be fully normalized until the U.S. gave up its aspiration of controlling Cuba, Vidal said, even if it were to lift the embargo and return the U.S. naval base in Guantanamo Bay, Cuba.
But Cuba hopes whoever succeeds Obama as president will continue his policy of improving U.S. relations with the island, given a majority of Americans backed this, Vidal added.
Cuba dislikes U.S. attempts to undermine its Communist rule, such as the Miami-based, U.S. government-controlled Radio Marti broadcaster which beams radio, TV and online news that is critical of Cuban leadership to Cuba.
Washington sees Radio Marti as part of its campaign for greater human rights, including freedom of speech, in Cuba.
"Human rights will continue to be one of the more challenging issues we discuss," the U.S. State Department official said. "We are working with the Cuban government to schedule a human rights dialogue in Havana."
This should take place by the end of the year, he said. (Additional reporting by Nelson Acosta; Writing by Sarah Marsh; Editing by Tom Brown)