1. (U) At approximately 11:00 p.m. local time on October 4, King Gyanendra announced on state-run television and radio that he had dismissed the government of Prime Minister Sher Bahadur Deuba because of its "incompetence" in being unable to hold mid-term elections, scheduled to begin November 13. Invoking his authority under Clause 127 of the Constitution to remove any "difficulty" that occurs in the implementation of the Constitution, the monarch said that he would assume executive powers until the appointment of a new cabinet in five days. The King stipulated that members of the new Cabinet must have "a clean image" and will be ineligible to stand in the next election, which he has postponed indefinitely. Gyanendra emphasized that he fully supports multi-party democracy and will never allow the democratic system to be compromised.
2. (SBU) Public reaction to the King's announcement has so far been muted. Kathmandu streets were calm as of 12:00 p.m. October 5. So far the only public demonstration has been an orderly, pro-Palace rally of about 300-400 at midday in the center of town. Once the Prime Minister and leaders of other political parties asked the King to postpone elections (Ref B), many observers expected the monarch to step into the constitutional void in some manner. But many of the same political leaders who asked the King to postpone elections also expected to participate in the caretaker government appointed by the King. The criteria for the caretaker Cabinet laid out by the King, however, may have substantially altered those expectations. MALINOWSKI