BRUSSELS (Reuters) - The European Union's executive will propose a reform of the bloc's asylum rules on Wednesday, EU sources said, that reflects caution in the face of deep divisions among governments about how to handle the migration crisis.
The European Commission last month floated scrapping a rule in the so-called Dublin system that gives responsibility for handling asylum claims to the first EU state a person enters -- a rule that has placed heavy burdens on Greece and Italy.
However, two sources said, it would now issue a legislative proposal retaining the "first country" principle while including a central scheme to spread claimants around Europe to give the frontline states the chance to relocate asylum seekers to other EU countries if arrivals on their borders are too high.
An emergency relocation system set up last year after record numbers of refugees and migrants reached Greece was agreed in the face of fierce opposition from east Europeans. Slovakia and Hungary have challenged the legality of the measure and Hungary plans a referendum on any more quotas this autumn.
Any proposal will need to win the backing of a majority of the 28 EU states as well as the European Parliament for it to be enacted and EU officials and diplomats do not expect agreement swiftly.
An EU source said separately that the Commission would also propose a "financial sanction mechanism" for countries that refuse to take in claimants.
"It should therefore go beyond symbolism but be understood as prohibitive pricing," the source said. "If a member state does not show solidarity in taking in refugees, it has to compensate with financial solidarity."
Last year, a Commission suggestion that would have given countries an option to pay 0.002 percent of national income to help migrants instead of taking in asylum seekers was not endorsed by leaders. One east European diplomat in Brussels said a new proposal for financial penalties would also be unpopular.
Germany - the EU's biggest economy and the final destination for most of the more than a million migrants who arrived in the bloc last year - is keen to see a permanent mechanism to share out the load.
Ex-communist states in central and eastern Europe say their homogeneous societies are ill equipped to take in large numbers of migrants, especially from the Middle East or Africa.
Diplomats speculate that the division over migration between Eastern states and richer Western members which pay for the EU grants and subsidies they receive could affect negotiations on the bloc's budget.
Officials hope, however, that an EU agreement with Turkey last month that has seen a sharp drop in refugees arriving in Greece could ease internal tensions over the migration issue, which has fueled a rise in nationalist parties across Europe.
Also on Wednesday, the Commission is set to propose easing visa requirements for Turks as part of the deal, though that also faces difficulties with governments and EU lawmakers who argue that Ankara has not met all the conditions, notably on improving its human rights record.
Reporting by Gabriela Baczynska, Editing by Alastair Macdonald and Richard Balmforth