We present observations of CO, 13CO and of H2O in the middle and far-infrared taken with the ISO-SWS and ISO-LWS spectrometers toward two positions in the Galactic Center region (Sgr A^* and GCS-3). Both ice and gas phase molecules are detected. The ISO data have been complemented with observations of the J=3-2 and J=7-6 lines of CO carried out at the Caltech Submillimeter Observatory. The ISO and CSO data indicate that the absorbing gas is extremely cold, TK 10 K, suggesting that it is located in the dark clouds of the different spiral arms that intersect the line of sight towards the Galactic Center. From the analysis of the CO absorption we derive 13CO gas phase column densities of 1.1 and 0.7\per 1017\cmi towards \sgra and GCS-3 respectively. The H2O gas column density in the direction of Sgr A^* is 2\per 1016\cmi. The derived CO/\h2o and gas/solid abundance ratios corresponding to these cold clouds are remarkably similar along the two lines of sight. We find that nearly all the CO is in the gas phase, while the \h2o is almost entirely frozen onto the surfaces of cold dust grains. Finally, the N_gas+ice(CO)/N_gas+ice(H2O) abundance ratio is 5 implying that H2O formation processes are highly efficient.