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Wednesday, Mar 30, 2005

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Secrecy and governance

By Moushumi Basu

The practice of maintaining official secrecy in governance has provided an implicit sense of security and immunity to political establishments the world over.

THE OPENING of the official files by the British Government in the first week of February concerning `Black Wednesday' (September 16, 1992) — the day that saw the exit of the British pound from the European Exchange Rate Mechanism (ERM) — forms a compelling reason for us in India to take up a similar advocacy concerning public access to information on economic affairs in India. In the last decade or so, while there has been substantive movement at both national and regional levels towards greater openness, transparency and accountability in governance, the practice of secrecy in the conduct of economic policies has remained unaffected by these developments. Secrecy in the realm of economic policy is recognised as a legitimate exception to the law pertaining to disclosure of information.

Section 8 of the Indian Freedom of Information Act 2002 exempts the state from disclosing those trade and commercial secrets which would prejudicially affect the legitimate economic and commercial interest or the competitive position of a public authority; or would cause unfair gain or loss to any person. It is in this context that the recent move by the British Government to open up files relating to an event of utmost political importance needs to be appreciated.

The documents released on a request by the Financial Times, under the recently amended Freedom of Information Act, reveal significant disagreements between Margaret Thatcher and the Chancellor of the Exchequer, Nigel Lawson, over Britain's decision to join the ERM; the failure of the succeeding government to make a realistic assessment of the potential impact of German unification on the British economy; lack of contingency plans to deal with the crisis over interest rates (recession at home required lower interest rates while the need to keep the pound within the ERM band required higher interest rates); the Bank of England's ill-advised move to spend around $39 billion (approximately £20 billion) in purchasing pounds and the record loss of £3.3 billion in a single day of Treasury money. While the strategic timing close to the general elections might have given rise to some justified scepticism about the possibility of political abuse, the public has significantly welcomed the disclosure.

The practice of maintaining official secrecy in governance has been instrumental in providing an implicit sense of security and immunity to political establishments the world over. Starting with the ancient monarchies where official secrecy was more or less identified with the personal intrigues of the royals, and in the case of oligarchies to affairs between smaller groups of men, the onset of democracy saw a more refined justification for secrecy in the name of wider national security.

While the democracies represented a superior form of government than aristocracies, as decision-making apparatuses they proved to be more susceptible to public control and opinion than the latter. The political compulsions of increasing popular representation challenged the existing modus operandi of a closed system of governance. Institutionalisation of secrecy, in other words, became a political necessity for Western democracies.

Thus while formally it was the Agadir crisis — the deployment of German warship in the Moroccan port in July 1911 that justified the unusually hasty passage of the Official Secrets Act by the British Parliament — the real reasons for secrecy lay in the assault that democratisation was inflicting on the traditional hold exercised by ruling classes over the state. It is indeed ironical that a practice that in part supported the project of colonialism did not see the end of day with decolonisation. Secrecy in governance remained very much a legitimate exercise of state power, justified in the name of national security.

The overwhelming secrecy and mystification with respect to economic policy in India, especially negotiations relating to structural adjustment, serves as a relevant illustration. Structural adjustment in 1991, it may be recalled, was largely justified by the present Prime Minister, then Finance Minister, as a measure to bail India out of the financial crisis. The loan agreements and conditionalities were classified as state secrets and legally protected under the Official Secrets Act (OSA). The same continued to be the fate of the Social Safety Net (SSN) operation financed in December 1992.

The SSN package for India consisted essentially of programmes, which were far removed from what had traditionally been `safety net' programmes in Africa and Eastern Europe. The credit essentially consisted of policy-related reforms in sectors of primary education, health and nutrition. It is significant that the audit report for this project commented on the fact that opinions were divided within the Bank itself as to how policy level changes in primary health care or education were going to help ease transitional costs of reform. However, the SSN agreement that serves as useful illustration of the kind of information protected under the OSA raises several other related questions.

First, what are the justifications for placing the loan agreements of the SSN or for that matter all documentation related to development loans and credits under the OSA? Secondly, on what grounds does the Government defend the non-disclosure of such information in the name of national security? Thirdly, how does the Government justify the contradictions between its policy of secrecy and its declared policy objective of greater public involvement, transparency and accountability in governance?

While the original Official Secrets Act (1923) in Britain has undergone several significant amendments, the OSA in India ironically remains stuck in the colonial period. Many of the important files concerning development in the early years of Independence remain undisclosed to this day. These include among others Cabinet files related to important policy decisions such as the rejection of the Bhore Committee report, advocating a national programme of comprehensive primary health care.

For a democracy where citizens have equal political rights, questions related to the official secrecy become important. Who benefits from the secrecy or whom does secrecy protect? The construction of Narmada Dams, for example, began largely under the protective cover of OSA with the public and those affected by the construction being denied access to project-related information. The issue concerning secrecy and governance today is not simply about increased public involvement in policy making, but about the area or information the governments choose to open up for wider public deliberation and scrutiny.

Where do governments draw the line between what information should be kept secret and what information should be made freely available to the demos? Policy makers who write reforms, supposedly in response to exigencies are, it must be remembered, more adept at closing, rather than opening, the state to wider democratic scrutiny.

(The writer is Visiting Fellow at the University of Sussex.)

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