Obama hopes for U.S. embassy in Cuba before April summit in Panama

In an interview with Reuters, Obama also cautioned that it will take more time to fully establish normal relations with Cuba after more than a half-century rupture.

"My hope is that we will be able to open an embassy, and that some of the initial groundwork will have been laid" before the April 10-11 Summit of the Americas in Panama City, Obama said.

"Keep in mind that our expectation has never been that we would achieve full normal relations immediately. There's a lot of work that still has to be done," he said.

In a historic agreement, Washington and Havana announced on Dec. 17 that they planned to restore diplomatic relations following 18 months of secret talks.

Two rounds of "normalization" talks in Havana and Washington have since made quick progress toward renewing official ties.

Cuba is keen to have Washington's official recognition of its one-party system run by the Cuban Communist Party, while the Obama administration believes establishing formal relations will strengthen its hand in Latin America where longstanding U.S. efforts to isolate Cuba have failed resoundingly.

After the "last round of talks on Friday, the head of the United States division at the Cuban Foreign Ministry, Josefina Vidal, told Cuban state media that Havana was willing to restore diplomatic relations as soon as the Obama administration declares its intent to take the Caribbean island off a list of state sponsors of terrorism.

It is the first time Cuba has said publicly it is willing to restore relations before it is removed from the list.

While critics, including some members of Congress, have called the end of U.S. attempts to isolate Cuba a gift to the authoritarian Cuban government, Obama said there are already signs it is prompting Havana to liberalize.

"We are going down a path in which we can open up our relations to Cuba in a way that ultimately will prompt more change in Cuba. And we're already seeing it," the U.S. president said.

"The very fact that, since our announcement, the Cuban government has begun to discuss ways in which they are going to reorganize their economy to accommodate for possible foreign investment, that’s already forcing a series of changes that promises to open up more opportunities for entrepreneurs," he said.

"And that’s always been the premise of this policy; that, after 50 years of a policy that didn’t work, we need to try something new that encourages and ultimately I think forces the Cuban government to engage in a modern economy. And that will create more space for freedom for the Cuban people," Obama said.

Both U.S. and Cuban negotiating teams came out of Friday's talks in Washington in an upbeat mood but did not set a date for formal renewal of diplomatic relations that were severed in 1961.

The two countries, politically at odds since soon after Cuba's revolution in 1959, currently have diplomats working in each other's capitals, but they operate from what are known as Interests Sections.

The head of the U.S. delegation, Assistant Secretary of State Roberta Jacobson, said she was “optimistic” about the renewal of relations before the Panama summit.

Vidal, the head of the Cuban negotiators, later told state media that it could take place before both sides are ready to open embassies.

"In our view it's not necessary to put it all in one package because if, for example, in a few weeks we receive some satisfactory notification in regards to the matter of Cuba's removal from the terrorist list, I think we will be ready to then begin talking about how to formalize the re-establishing of relations," Vidal said in an interview published in Cubadebate, a state media outlet.

Delinking the opening of embassies could make it easier for diplomatic relations to be renewed prior to the Panama summit. The Obama administration is nearing completion of its review of Cuba's place on the list, but it must be submitted to Congress before the country can be removed after a 45-day wait period, U.S. officials say.

Cuba was added to the terrorism sponsors list in 1982 when it backed insurgencies during the Cold War. More recently it has earned credit for aiding an ongoing peace process with Colombia's left-wing FARC guerrillas.

A U.S. State Department representative said on Monday that Washington was focused on getting both done before the summit. "We believe re-establishment of diplomatic relations and opening of embassies should be done together. With will on both sides, we can get them done before the Summit," the person said.