BRUSSELS (Reuters) - European Union leaders met on Thursday seeking agreement with Turkey to stop migrants reaching Greece and voiced a mix of hope for a fix to the crisis and caution that a deal could fall through or prove unworkable.

European Council President Donald Tusk said he was "more cautious than optimistic" before chairing evening summit talks where the 28 EU national leaders aim to forge a common position before meeting Turkish Prime Minister Ahmet Davutoglu on Friday.

German Chancellor Angela Merkel, who first devised the plan with Davutoglu and sprang it on surprised peers at a special summit 10 days ago, said she thought it possible to overcome fellow leaders' lingering concerns over the legality and practicalities of deporting all new migrants back to Turkey in return for political and financial concessions to Ankara.

"These will be complicated negotiations but the basic direction is clear," she told reporters, adding that she shared Tusk's "cautious optimism, with the emphasis on cautious".

A key problem is Turkey's four-decade-old dispute with EU member Cyprus, whose President Nicos Anastasiades insisted there could be no agreement to speed up Turkey's EU membership talks until Ankara stops barring Cyprus from its sea and airports - itself a result of a refusal to recognise the Cypriot state.

"Cyprus is not the obstacle," Anastasiades said.

There is anger in Nicosia at Merkel for appearing to make Davutoglu an offer without consulting Cyprus - especially at a time when talks on reuniting with the Turkish-backed north of the island are at a delicately hopeful stage. And Tusk, a former Polish premier, made clear Cypriot interests must be respected.

"The agreement must be acceptable to all 28 member states, no matter big or small," he told a news conference.

"EDGE OF THE LAW"

Nonetheless, after a year in which more than a million people have arrived in Europe fleeing war and poverty in the Middle East and beyond, EU countries are looking desperately to Turkey to seal its coastline and stem the flow.

But Tusk forecast difficult talks, saying any agreement must fully comply with European and international law; U.N. agencies and rights groups have been sceptical it will do that and some EU leaders arriving at the summit shared that disquiet.

Lithuanian President Dalia Grybauskaite said the package was "very much on the edge of international law" and, even if agreed, appeared over-complicated and hard to implement.

One senior EU official said that a lack of legal clarity in Turkey on the status of refugees from countries other than Syria - notably large numbers of Iraqis and Afghans - was emerging as a serious sticking point to Greece sending such people back.

Prime Minister Alexis Tsipras, facing a build-up of more than 40,000 refugees stranded in Greece by recent border closures in the Balkans, said his economically struggling country needed more help to care for migrants.

EU officials said Greece also needed time to set up legal and administrative structures to carry out the deportations.

In Ankara, a senior official said countries like Cyprus should not be allowed to block progress. Turkey does not intend to make new demands or proposals, the official added, seeming to rule out any goodwill gesture to break the standoff with Cyprus.

A draft agreement circulated by Tusk and debated by EU ambassadors on Wednesday evening watered down two important inducements to Turkey and included new safeguards intended to overcome legal objections to sending back migrants.

Ankara's central objective - visa-free travel for Turks to Europe by June - will depend on Turkey meeting a raft of long-standing EU criteria. That need to meet all 72 conditions was stressed by French President Francois Hollande, whose voters are alarmed by the idea of 75 million Muslim Turks free to travel.

Under the plan, Turkey would take back all those, including Syrian refugees, who cross to Greek islands. The EU would also double an agreed 3 billion-euro fund to help refugees in Turkey.

The draft, seen by Reuters, says the aim is "to break the business model of the (people) smugglers" and to offer migrants an alternative to putting their lives at risk. It stresses the return is "a temporary and extraordinary measure which is necessary to end the human suffering and restore public order".

 

CYPRUS QUESTION

Diplomats said much will depend on how Davutoglu responds to a vague offer to open new "chapters" of Turkey's snail-like negotiations to join the EU in the distant future.

Cyprus has long blocked some chapters over the port dispute. Tusk's draft said only that the EU would work with Turkey to "prepare for a decision" on opening new accession chapters "as soon as possible" - a hazy prospect Davutoglu may not accept.

To satisfy EU and international law, Greece and Turkey will have to modify domestic legislation so that Turkey is regarded as protecting asylum seekers in line with the Geneva Convention, even though Ankara limits its formal commitments to that treaty.

All migrants who reach Greece would have a right to put their case for asylum and to appeal against deportation.

Setting a start date for the scheme is tricky. Some want all those arriving on Greek beaches from Monday to be held for deportation, but Athens fears it needs weeks to prepare. Yet such delay may trigger a rush to cross before Europe shuts down.

(Additional reporting by Orhan Coskun in Ankara, Michele Kambas in Athens and Gabriela Baczynska, Humeyra Pamuk, Robin Emmott, Robert-Jan Bartunek, Philip Blenkinsop and Jan Strupczewski in Brussels; Writing by Alastair Macdonald and Paul Taylor; Editing by Mark Heinrich)