* EU, Turkey to hold summit on March 26
* Turkey on charm offensive, EU officials lukewarm
* Bloc due to offer Turkey another 3 bln euros for Syrian refugees (Adds Celik, detail of EU offering Turkey more money at summit)
By Gabriela Baczynska and Robin Emmott
BRUSSELS, Feb 7 (Reuters) - European Union leaders are so discomfited by their relationship with Turkey these days that they relegated their summit next month to Varna, a Bulgarian Black Sea port, rather than hold it in Brussels.
But despite their wariness over President Tayyip Erdogan, who has cracked down hard on critics at home and lashed out at the West, they need him too much to turn their backs.
Turkish and European Union officials both expect an uneasy atmosphere at the summit on March 26. But the European hosts will have little choice but to hear Erdogan out as he asks for more money for Syrian refugees, a deeper customs union and progress in talks on letting Turks visit Europe without visas.
Money is likely to be forthcoming, but little else. A senior EU official dealing with the matter said the bloc would grant Turkey a second 3 billion euros ($3.7 billion) for schools, medical care and jobs training for the Syrians it hosts. But progress on visa-free travel and customs were both a "no-go".
On the one hand, European leaders have robustly criticised Turkey for what they see as rapid backsliding on democracy and human rights, especially during a crackdown in the wake of a failed coup in 2016. Some of Erdogan's hostile rhetoric towards Europe last year, including comparing the Dutch and German governments to Nazis, has been, for EU leaders, beyond the pale.
But on the other hand, European countries still rely on Turkey as a NATO ally on Europe's southern flank. And an EU deal with Erdogan that halted the mass influx of Syrian refugees into the bloc means the Turkish leader is like an estranged relative that you can't disinvite from a family dinner, no matter how badly you think he has behaved.
"You intensely dislike the person you have in front of you, but you just cannot do without him," said Marc Pierini, a former EU ambassador to Turkey, now at the Carnegie Europe think-tank.
Turkey says it is in Europe's interest to be warm.
"If the EU gives positive signals to Turkey, the more Turkey will do in terms of reforms," said Ankara's envoy to the European Union, Faruk Kaymakci.
"But the more the EU isolates Turkey, the more inward-looking and nationalist it will turn," he told reporters.
A second senior EU official said Turkey had sought to have the summit in Brussels, but the bloc decided to hold it in Varna instead to lower its profile. Bulgaria, Turkey's neighbour, has better relations with Ankara than some other EU states and holds the rotating EU presidency for the first half of 2018.
The second senior EU official described European Commission President Jean-Claude Juncker as furious over Erdogan's crackdown. Some 50,000 people, including journalists, have been arrested and 150,000, including teachers, judges and soldiers, sacked or suspended from their jobs.
"For the EU, this is incredibly uncomfortable. They are backsliding on everything," the second official said.
Juncker has warned Turkey that it cannot count on any significant rapprochement with the EU as long as it keeps journalists in jail.
Germany is particularly angry that some German citizens are among those arrested. The Netherlands withdrew its ambassador from Ankara this month, after 2017 was marked by Erdogan calling German and Dutch officials "fascists" for stopping rallies in support of a Turkish referendum to grant him broader powers.
Turkey is still a candidate to join the EU, but the bloc froze accession talks over the crackdown. Brussels is deeply sceptical that Ankara would make amends and deliver the judicial and democratic reforms required to restart the negotiations.
Turkey's EU affairs minister, Omer Celik, said on Wednesday Ankara has made an effort to meet all criteria the EU has set for letting Turks enter Europe without visas. Ankara said it passed on the relevant documents to Brussels on Wednesday.
But the first senior EU official was sceptical: "Even if they present a draft softening their counter-terrorism laws, this would not be enough," the official said, citing issues of cooperation with Cyprus and with European police agency Europol.
"Neither the EU leaders nor the European Parliament would accept visa-free travel now."
Turkey's request to deepen its customs union, which already allows tariff-free trade with the EU for most goods, would also be politely rebuffed. Germany in particular has opposed further talks on customs for now.
The price Erdogan will have to pay for being invited to Varna, EU officials say, will be hearing frank words. Just weeks after the summit, the European Commission will release a damning report on the situation in Turkey. Few in the EU expect bright moments in the bloc's relationship with Turkey this year.
"The Varna summit is probably it for 2018. Unless Erdogan decides to make some spectacular gesture. But nobody here believes it," the first senior EU official said. (Additional reporting by Dominic Evans and Ali Kucukgocmen in Ankara; Writing by Gabriela Baczynska; Editing by Peter Graff)
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