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Romania's £20m act of settlement for king without a castle or a country

The Government of Romania is to offer its former king €30m (£20.7m) in compensation for historic property seized by the ousted communist regime.

The settlement is poised to bring to an end a long-running dispute between the government of the Balkan country and the former monarch, King Michael, 82.

The king went into exile in Switzerland in 1947 after the communists forced him to abdicate. He has been seeking to recover the Peles domain, including Peles Castle, one of the country's most popular tourist attractions, which was built by Michael's great uncle, King Carol I.

His legal argument for the retrieval of the property was based on a law passed two years ago that settled the issue of assets seized by the communists. Yesterday, the government confirmed that it would draft a special law to pay damages, as well as allowing Michael to use Peles Castle "for special occasions".

As part of the settlement, a smaller building on the grounds known as "The Knights' House" will be returned to his ownership. "This is the best possible solution," said Adrian Vasiliu, the lawyer for the Royal House of Romania. "If this law is approved by parliament, Peles Castle will finally belong to the state legally."

Michael returned to Romania in the aftermath of the 1989 overthrow of communism. While crowds greeted him at the airport, the former communist President Ion Iliescu was less welcoming and used tanks to prevent him from touring the country.

Two years ago, the two appeared to be reconciled when the president referred to Michael as "majesty" for the first time.

The government has since made a number of concessions, granting him a public salary, an official residence and a bodyguard.