Juncker to set out EU refugee plan, challenging leaders

European Commission President Jean-Claude Juncker attends a news conference after signing an agreement on the European Fund for Strategic Investments (EFSI) at the EU Commission headquarters in Brussels, Belgium, July 22, 2015. REUTERS/Francois Lenoir

By Alastair Macdonald STRASBOURG (Reuters) - European Commission President Jean-Claude Juncker will lay out plans for handling Europe's refugee crisis on Wednesday that may provoke new wrangling among EU states and between national leaders and the EU executive. However, the mounting scale of the human calamity on the bloc's frontiers -- and growing fears that discord might do wider damage to shared interests like freedom of travel across Europe's internal borders -- appears to have kindled a will to compromise after an earlier Juncker plan in May provoked bitter recriminations. Making his first annual State of the Union address to the European Parliament in Strasbourg, Juncker will propose states accept binding quotas to take in 160,000 asylum-seekers from frontline countries - four times the number he put forward in May to howls of outrage, notably in eastern Europe. EU officials say he will also suggest a permanent mechanism to relocate people whose arrivals have put a strain on Italy, Greece and Hungary because current asylum rules make handling their claims a responsibility of the first EU state they enter. But the former Luxembourg premier, who since they appointed him has often berated the 28 member states for nationalistic failures to shoulder collective responsibility, is also expected to address leaders' concerns about lax controls on the external frontiers by setting out plans to speed up the process of weeding out migrants who do not merit asylum and deporting them. That balance between humanitarian embrace and self-defense for a continent fearful of the millions suffering from war and want beyond its borders, has helped take some of the heat out of a debate among leaders, who rejected Juncker's original migrant quota idea as a counter-productive Brussels "diktat". On Wednesday, he is also expected to elaborate on earlier proposals to counter people-smuggling, help countries in Africa and the Middle East to create more jobs, support U.N. refugee programs and offer ways for safe migration. "This time, the Commission seems to be proposing a more comprehensive approach, also addressing the need to control the external frontiers better," said one EU diplomat whose government was among those in the east who argued that their society, unused to immigration, could not take in large numbers. "There is still a lot to negotiate. There is a lot we cannot accept. But the debate is now a lot less emotional." MERKEL PERSUASION Also driving the EU towards some accord has been the stand taken by German Chancellor Angela Merkel, whose government has taken in the greatest number of asylum-seekers. She has called on poorer eastern neighbors who receive German-funded EU subsidies to show solidarity -- and warned that the Schengen system of open borders from which they benefit is under threat from chaotic movements of migrants across the bloc. "When Merkel needs something, and she plays it sensibly as she usually does, things start to move," another senior EU diplomat. While Hungarian Prime Minister Viktor Orban remains vocally opposed to relocation quotas, his country will now benefit from the scheme, having taken in tens of thousands. And Polish Prime Minister Ewa Kopacz conceded on Tuesday that Warsaw could take in more than the 2,000 people it has said. Under Juncker's plan, EU sources say Poland would be asked to take in nearly 12,000. EU officials have said countries could also be offered the chance to contribute financially rather than take in migrants. Britain has been critical of the EU approach but is exempt from the bloc's asylum policies and will not take part, although Prime Minister David Cameron said this week it would accept up to 20,000 Syrian refugees over five years. Spain, which had complained its likely quota was too high, said on Tuesday it was ready to take what the European Union allocated to it. Juncker is due to speak shortly after 9 a.m. (0700 GMT). (Editing by Mark Trevelyan)