Austria's VC sees compromise in EU-Turkey talks

He said the money should be spent primarily for housing and schools and that the EU would sign off on payments only after reviewing each project.

A Syrian refugee walks into Macedonia during a rainstorm after crossing the border from Greece to Macedonia near the Macedonian town of Gevgrelija November 27, 2015.

Austrian Chancellor Werner Faymann expects the European Union and Turkey to strike a deal on how to stem a tide of refugees into the continent in return for financial aid and closer ties, he told the Kurier paper.

European and Turkish officials have been working to smooth out their remaining differences on an agreement, which they hope will be signed on Sunday by EU leaders and Turkey's prime minister.

Turkish President Tayyip Erdogan has broadly accepted a draft plan under which the EU would provide 3 billion euros ($3.18 billion) in aid over two years for the 2.3 million Syrian refugees in Turkey. It would also "re-energize" talks on Ankara's joining the bloc and ease visas for Turks.

"Turkey now wants 3 billion a year to invest the money in schools and accommodation. We will meet somewhere in the middle," Faymann, a Social Democrat who governs with conservative coalition partners, was quoted as saying.

Noting Erdogan's push for EU membership, Faymann noted Vienna's stance that this would have to be put to a referendum in Austria that would likely fail. He said talks should focus instead on a "a privileged partnership" with Turkey.

Asked about joint preparation for the talks by Austria, Germany, the Netherlands, Sweden and Finland, Faymann said these countries were net contributors to EU finances and prime destinations for refugees making their way to Europe.

"We pay so that in other countries the standard of living rises. Now we demand that we are not left alone with the refugee issue," he said, reiterating his threat that countries that shun solidarity over refugees may suffer when it comes to EU funding.

He appealed to keep the Schengen open-border system in Europe, which he said helped Austria's export-led economy.

Asked about prospects for easing sanctions against Russia over Moscow's annexation of Crimea given Russia's potential role as an ally in fighting Islamic State militants, Faymann said:

"Cooperation with Russia in the framework of the fight against terrorism is very important. The annexation of the Crimea justified sanctions against Russia. I am in favour of now thinking in the EU about normalizing relations with Russia."

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