* Changes make it harder to prosecute high-level graft
* EU likely to criticise immunity move
By Luiza Ilie
BUCHAREST, Jan 22 (Reuters) - Romanian members of parliament voted overwhelmingly on Tuesday to boost their immunity from prosecution, a move set to annoy a European Commission already exasperated by Romania's hesitant efforts to tackle high-level corruption.
The deputies approved changes to a law that regulates their activity, lowering their housing and transport allowances but also making it harder for prosecutors to investigate them for graft or conflict of interest.
Romania's European Union partners have its justice system under close scrutiny and last year expressed concerns over the rule of law when the ruling leftist alliance tried to impeach the country's president. The EU has also kept Romania out of its passport-free Schengen area.
Romanian prosecutors need parliament's approval to launch a criminal probe against MPs.
Under the previous rules, parliament's legal committees would assess the requests and issue a non-binding approval or rejection before a mandatory vote in the chamber.
With the changes approved on Tuesday, parliament would not need to vote if the committees reject the requests from prosecutors.
"This means those prosecutors' requests that are rejected will never see the light of day," said Laura Stefan, a legal specialist at the Expert Forum think tank. "The process is likely to be blocked in the committees."
Lower house speaker Valeriu Zgonea said some of the changes, such as a ban on deputies hiring relatives, mirrored regulations for European MPs and were taken after consultation with state institutions, according to comments carried by local media.
GRAFT BODY'S POWERS CURTAILED
Another change approved by the deputies softens the powers of the National Integrity Agency (ANI), an anti-graft watchdog set up after Romania joined the EU in 2007 to investigate the wealth and potential conflicts of interest among politicians.
The work of the agency has won praise in Brussels.
ANI discovered that 42 lawmakers had conflicts of interest or amassed dubious wealth in the four years up to 2012.
Deputies who amassed conspicuous wealth or faced conflicts of interest would automatically lose their seat if they did not provide evidence to ANI. Now, MPs can hold on to their post until a final court ruling on their case, which in Romania's cumbersome legal system could take years.
"I expect these changes will feature prominently in the European Commission's (justice monitoring) report and ... that our Schengen entry will be postponed for a long time," said Sergiu Miscoiu, an analyst with the CESPRI political think tank.
"Then there are risks to Romania's trust and credibility within the EU, which are already very low, and ... perhaps that will also hurt investment," said Miscoiu.
Six years after joining the EU, Romania has made little progress in reforming its state-dominated economy and fighting widespread corruption.
Previous justice monitoring reports have criticised parliament for trying to thwart criminal inquiries. Between 2006 and 2012, anti-corruption prosecutors put 23 lawmakers and 15 ministers and deputy ministers on trial. (Editing by Kevin Liffey and Tom Pfeiffer)