In its report the commission describes organised crime and corruption in Bulgaria as “deeply rooted problems” and the country’s judicial reform progress as “limited”. The frozen aid amounts to €486 million (US $754 million) . Although it avoids financial sanctions, the report on Romania is similarly critical and notes that, “70 cases of suspected fraud involving EU funds had been opened between June 2007 and March 2008” (International Herald Tribune, IHT). According to Reuters, the EU toned down the harsher wording of earlier drafts and chose not to include “a threat to delay Bulgaria's entry into the euro single currency zone and the Schengen area of passport-free travel.”

Commission President Jose Manuel Barroso called the reports "a reality check -- they show that both the Bulgarian and Romanian governments need to step up their efforts on judicial reform, corruption and in the case of Bulgaria organised crime," reports Reuters.

Bulgarian Prime Minister, Sergei Stanishev, responded by acknowledging that there are “grounds for criticism,” while asserting that Bulgaria has the political will to go ahead with reforms, reports SofiaEcho.

According to the Economist, foreign criticism of government reforms is welcomed by Bulgarians and the “EU’s popularity has rocketed, whereas the government’s negative rating is now as high as 73%.” The Financial Times writes that: “Bulgarians, who face employment restrictions in many EU states, are impatient for the country to be admitted to the Schengen area so that the restrictions on work and travel will be eased.”

The Bulgarian Minister of Economy and Energy, Petar Dimitrov, has warned that if there is a withdrawal of foreign investors from the country it “could cost Sofia more than the frozen EU funding”, reports BalkanInsight.

The reports have potential far reaching implications as some observers believe the reports send “an unmistakable signal to [EU] candidate countries such as Croatia, Serbia and Turkey about the need to crack down on corruption and to reform their penal codes” (Guardian). Bulgaria and Romania were admitted into the EU in 2007, “despite serious doubts about their readiness,” writes IHT.

To read TI’s press release on the European Commission’s decision please click here.

Since his inauguration in May, Medvedev has stressed the problem of corruption in Russia. In his speech, Medvedev said: “It is clear that corruption in our country is a genuine, systemic evil which we must fight against”, and called for a new anti-corruption legislation to be in place by 2009 (Kremlin). According to the St. PetersburgTimes, Medvedev will present the bill to the entire Duma for a vote in the autumn.

The possible cost of corruption in Russia was highlighted by a senior Russian government prosecutor in June who declared that “corrupt officials are siphoning off [US] $120 billion dollars a year [€75 billion] from the government's national budget”, reports MoscowNews. According to the same article, the figure represents approximately a third of the US $376 billion [€236 billion] budget for 2008. In July, another senior Russian official stepped forward claiming that: “A third of all money spent by the Russian government on its armed forces is lost to corruption” (BBC).

According to AP, Medvedev has said that "some people tried to discourage him from launching the anti-corruption plan, saying it will yield no results." The same article quotes him asserting that dealing with corruption is a "matter of honor for the government."

Some commentators are cautious of Medvedev's initiative. AP writes that “past Kremlin efforts to stem problems such as corruption have amounted to little but pledges and a few cases featured prominently in the state-run media.”

Kirill Kabanov, the director of the National Anti-Corruption Committee, a Russian based advocacy group, warned that any efforts to fight corruption are “doomed to fail unless nongovernmental organizations and the media are allowed to operate as watchdogs over bureaucracy,” writes the St. Petersburg Times.

Similarly, Elena Panfilova, head of TI Russia, emphasised in an interview with Reuters: “The best thing he [Medvedev] can do now is to make public the full text of the plan and put it to open debate by experts and the public ... Such things need full transparency."

The bill was passed a day earlier by the Senate with 171 to 128 votes in favour of the measure, which the Chamber of Deputies passed on 11 July (Bloomberg).

Reuters describes the signing of the law as “a victory” for Prime Minister Silvio Berlusconi, who says “politically motivated prosecutors have been out to get him since he entered politics 14 years ago.”

However, critics say that the law is aimed at protecting Berlusconi. According to Bloomberg, the immunity law would put on hold two current trials: “Berlusconi is charged in Milan with bribing U.K. lawyer David Mills to lie under oath [...] In a separate case, the premier is accused of committing tax fraud when purchasing film rights for Mediaset SpA, his television company. Berlusconi and Mills deny any wrongdoing.”

“The bill's supporters have argued that the amendment is needed to allow the top state officials to focus on doing their jobs - without legal destraction,” writes the BBC.

During his political career Berlusconi has counted “2,500 hearings, 587 visits by the police and 174 million euros (US $272.9 million) in legal fees. He has won all the cases against him, either by acquittal or because time ran out under Italy's statute of limitations” (Reuters).

AP notes that: “Conservative lawmakers tried to introduce an immunity law during Berlusconi's 2001-06 tenure. But in 2004 the country's Constitutional Court overturned it on grounds that it violated constitutional principles.”