"The government is going to compensate all losses caused by the toxic mud catastrophe," Interior Minister Sandor Pinter told reporters in Budapest, adding that the losses had now reached 203 million euros (277 million dollars).

"From the end of July 2011, life will resume its normal course" in Kolontar, Devecser, and Somlovasarhely, three of the villages affected by the spill, the minister said, after meeting the mayors of the areas concerned.

"It will be necessary to spend nearly 30 million euros in order to build new houses and around 110 million euros for the clean-up of agricultural land affected."

The announcement came as victims on Wednesday, who said they had been promised full compensation, pledged to hold off on a planned protest if they received a visit by Prime Minister Viktor Orban.

So far, only about 145,000 euros have been paid out to the region's inhabitants.

The government argues villagers must first make clear whether they intend to stay put or move to new housing further away.

The residents meanwhile protest that they have not been given enough information on whether it is safe to stay.

Hundreds lost their homes and livelihoods after a holding reservoir at an alumina plant, some 160 kilometres (100 miles) west of Budapest, burst its walls on October 4.

The crack sent more than 700,000 cubic metres of toxic red mud spilling across an area of 40 square kilometres (15.4 square miles), polluting the Danube River and its tributaries and causing an ecological disaster.

earlier related report
EU team on waste management mission in Italy
Brussels (AFP) Nov 19, 2010 - A European Union team heads to Italy early next week in the wake of its garbage crisis, weeks after the country was warned of legal action and massive fines failing waste management improvement around Naples.

A spokesman for Environment Commissioner Janez Potocnik said Friday that a team of experts would be in Italy on Monday and Tuesday to look at the situation but declined further details on the mission.

The move comes however after Potocnik said last month, amid clashes over the garbage crisis in the Naples, that "today's situation leads us to believe that measures taken by Italian authorities since 2007 are insufficient."

He said at the time that the Commission, the EU executive arm, was considering sending a team to assess whether Italy remained in breach of European legislation requiring waste disposal installations that protect human health and the environment.

Europe's highest court in March found Italy in breach of EU legislation for its failure to clean up the Naples region garbage crisis.

Should the European Commission decide to refer the matter back to the court -- the Luxembourg-based European Court of Justice -- for a second time, and should it decide against Italy, the country would face a fine running into millions of euros.

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