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* Lebanese-Swedish accused of plotting against Israelis
* Was arrested shortly before Bulgaria bus bombing
* Verdict could impact EU terrorism designation debate
LIMASSOL, Cyprus, March 7 (Reuters) - A Hezbollah member appeared in a Cypriot court on Thursday for the last time before it rules on whether he plotted to attack Israeli interests for the Iran-backed Lebanese group.
If the court finds the Lebanese-Swedish man Hossam Taleb Yaccoub guilty when it delivers a verdict on March 21, it will strengthen calls for the European Union to follow the U.S. lead and declare Hezbollah a terrorist organisation.
Yaccoub was arrested in the Cypriot port city of Limassol last year, two weeks before a suicide bomber killed five Israeli tourists in Bulgaria in July, an attack Sofia blamed on Hezbollah, a charge the group denied.
The prosecution says Yaccoub tracked the movements of Israeli tourists on the island, a popular holiday destination in the eastern Mediterranean, noting arrival times of flights from Israel and registration numbers of buses ferrying visitors to hotels.
He pleaded not guilty to eight counts of conspiracy, consent to commit a crime and participation in a criminal organisation.
Yaccoub, who was 24 when arrested, has not denied he is a member of Hezbollah or that he carried out courier duties for the organisation in Europe. He says he never plotted any crime but merely acted on the instructions of a handler, who always wore a mask whenever they met.
In a wood-panelled courtroom packed with high school students on work experience, Yaccoub nodded in greeting before taking his seat in the dock, head bowed as he listened intently to proceedings translated from Greek to Arabic.
Unlike earlier appearances, Yaccoub was clean-shaven, and had laces on his shoes. The hearing was mostly procedural, with prosecutors and defence lawyers filing their closing arguments in writing.
The EU has resisted pressure from the United States and Israel to blacklist Hezbollah, arguing this could destabilise Lebanon's fragile government and contribute to instability in the Middle East.
But a guilty verdict in Cyprus would add to the pressure created by the bombing in Bulgaria - both EU members - for the 27-nation bloc to crack down on the organisation.
Hezbollah, which fought an inconclusive 34-day war with Israel in 2006 and is now a powerful part of Lebanese Prime Minister Najib Mikati's government, says the accusations against it are part of an Israeli smear campaign.
The fact that it is currently not considered a criminal group is a matter Yaccoub's defence team is trying to use to its advantage.
"I have asserted the charges have not been proven because there is no proof that Hezbollah is a criminal organisation," said Antonis Georgiades, Yaccoub's lawyer who also said there was no witness evidence backing conspiracy charges.
Within the EU, the Netherlands considers Hezbollah a terrorist group, while Britain reserves the designation for Hezbollah's armed wing.
Hezbollah was set up in 1982 with the help of Iran's Revolutionary Guards to fight Israeli forces which had invaded Lebanon. It was designated a terrorist organisation by the United States in the 1990s. (Reporting By Michele Kambas; Editing by Robin Pomeroy)