HAVANA (Reuters) - Fluttering U.S. flags, fixed-up roads and fresh paint on colonial buildings convey the optimism in Havana ahead of U.S. President Barack Obama’s historic visit this weekend, but rising inequality sours the mood for some of the city’s poor.

Yolanda Sanchez, 44, sits in her home in Havana, March 19, 2016. REUTERS/Alexandre Meneghini

The White House says the first such trip by a U.S. president since Fidel Castro’s 1959 revolution is a step toward better lives for Cuban people suffering under a U.S. embargo.

The Obama policy has specifically targeted Cuba’s small but growing private sector with measures such as allowing sales of farm and construction equipment for non-state enterprises.

Private-sector workers already enjoy advantages over those at the bottom of the income ladder, who must survive on meager state salaries and rations.

These low-paid workers feel left behind as prices rise, and see Obama’s visit as far removed from their difficult lives.

“He’ll come, take a ride in a vintage car and smoke a cigar - then he’s gone,” said Alberto Hernandez, a Afro-Cuban street sweeper, whose salary of 240 Cuban pesos a month, about $10, makes it hard to afford basics like toothpaste, he said.

Like many in Cuba, Hernandez remembers the most prosperous era to be the 1980s, when the Soviet Union still funded the Communist-led island. In contrast, even fervent supporters of Obama in the city see the ongoing U.S. embargo as a leading cause of poverty.

Low wages are not new to Cuba, and they are augmented by heavily-subsidised food, along with free healthcare and other government handouts, but the contrast with a relatively successful new middle class is stark.

“This is one of the biggest challenges for the state - to control inequality,” said Cuban sociologist Aurelio Alonso. “It must allow inequality to grow as little as possible.”

Slideshow ( 8 images )

There are no available figures for Cuban wealth distribution, but the gap between rich and poor is visibly far narrower than in most other parts of Latin America, with most of the island’s nouveau-riche living modestly by global standards.

The Cuban government under President Raul Castro has already responded to one of the causes of discontent - rising food prices, blamed partly on economic reforms that gave the private sector a bigger role in food distribution.

In a partial rollback, some of Havana’s neighborhood markets have given up on cooperatives with which they had struck deals and reverted to a state-run model with fixed prices.

Most of the winners, created by Obama’s looser restrictions on Cuban-Americans sending dollars to relatives and Cuba’s cautious opening to private enterprise, are white Cubans. Their exile families are more firmly established in the United States than Afro-Cubans.

Yolanda Sanchez, an Afro-Cuban, lives in a damp, windowless room, in a maze-like building of tiny apartments, some exposed to the elements by cracks in the ceiling. The decrepit former newspaper office is two blocks from streets painted and resurfaced ahead of Obama’s visit.

“That is just a facade,” Sanchez said, adding that she had lived in the supposedly temporary accommodation, provided by the state, for 12 years waiting for a proper home. “For us nothing is repaired.”

Her son, a former public sector physiotherapist now trying his luck with a cycle-taxi, was more vehement.

“The change is not for the people, it’s for government officials and their children,” he said, asking not to be named.

Not all poor public sector workers feel the same. Weighing vegetables for customers at a sun-dappled market nearby, Raymundo Goulet Odelin said profits of rapprochement with the United States would be seen in the long term.

“Change doesn’t happen overnight, my grandchildren will benefit from this,” he said. “This makes us happy. We’ve been enemies for 50 years, and really we’re not anyone’s enemies.”