E-Estonia: Turning an “Analogue” Nation Digital

Domestically, e-Estonia’s most visible elements have to do with bringing impressive digital convenience to many of the services the Estonian state makes available to its citizens (and resident non-citizens). These build upon a national plastic ID card, introduced in 2000, which contains a microchip allowing anyone with a computer easy access to various state-run (as well as private) services ranging from online medical prescriptions to the verification of the cardholder’s identity by means of a legally binding digital signature.

Beyond the country’s borders, advances like these are harnessed to a broad if inchoate marketing strategy presenting the relatively poor Estonia as a global frontrunner in the digital domain. Apart from the technology and applications associated with the ID card, Estonian officials also try to lay claim to start-up success stories such as Skype, whose connection with the country is sometimes less than exclusive. Most recently, Estonia has been promoting a scheme called e-residency whose aim is to make available to non-Estonians most of the benefits of the ID card—without, however, conferring upon the holder the more traditional privilege of the right to physical residency in the country.

Estonia’s outgoing President Toomas Hendrik Ilves is today e-Estonia’s leading global evangelist. While this is a role he is widely expected to perform, Ilves also often seeks to present himself in media interviews as the leading single source of inspiration behind Estonia’s e-drive, pointing to a 1996 initiative to connect all Estonia’s schools to the Internet. Ilves traces the story of e-Estonia back to the reveries he had in the early and mid-1990s, first as an ambassador and then as foreign minister, contemplating how best to leverage Estonia’s relatively small size. In practice, however, the drive to digitize the country owes most of its impetus to the radical rejuvenation Estonian politics underwent in the 1990s. Faced with the need to recreate most state institutions from scratch, Estonia’s very young leadership at the time (at one point the prime minister was 33 years old and his foreign minister 26) executed a decisive turn towards the West. That maneuver quickly exposed the archaic inadequacy of the bureaucratic structures and practices bequeathed to Estonia by the USSR. It was as a radical reimagining of the state-citizen relationship that the project now known as e-Estonia first materialized. That nexus is also most likely to remain the touchstone of its future success. So far, the project has transformed much of the citizen-state interface in ways that would be unimaginable in most Western countries, let alone the rest of the world.

Perhaps the locally most celebrated and cherished example of e-Estonia’s success involves tax returns. In 2015, when visiting Estonia, former Florida governor Jeb Bush publicly marveled at Estonians’ ability to file their taxes “online in five minutes.” That, in fact, probably overestimates the trouble the average Estonian in possession of a bank account, an ID card, and a computer needs to go to: in most cases, assuming your earnings are not overly diversified, the operation is a matter of no more than a few mouse clicks. E-prescriptions were briefly mentioned above, to these must be added the rapid digitization of all patient data and their instant accessibility to all authorized practitioners. Digital signatures became possible with the advent of the ID card and mean that most contracts are now attachments in emails. This civic convenience has made quick inroads into most areas of government business and has already become the norm assumed by the citizen.

E-voting is another application of the digitized ID card Estonian officials have aggressively tried to market abroad. Estonian voters were first given the opportunity to cast their ballots electronically— by means of their ID cards attached to their computers, inputting two security codes as requested—in local elections in 2005. By the 2015 parliamentary elections, more than 30 percent of the votes were cast electronically. Yet it has not all been plain sailing. Considerable domestic skepticism and other countries’ reluctance to follow Estonia’s example may indicate digital technology’s inbuilt—organic, as it were— limitations in applications seeking to facilitate citizenry’s political will formation. In Estonia, the leading opposition party, which has not fared well in the digital stakes, for whatever reason, has raised questions as to the technology’s inherent manipulability. Whilst the government and most experts reject the charge, there are indications that the elderly, in particular, could be vulnerable to outside interference in instances of officially unsupervised voting.

However, it is the unwillingness of Western countries to copy Estonian technological advances in this field that points to the broader problem, which is two-fold. Firstly, any technology which is not readily understandable and transparent to the citizen suffers from an immediate problem of legitimacy. How do you observe e-elections? Secondly, electronically tagging citizens to create vast, integrated databases may well greatly simplify the citizen’s daily existence, but it also constitutes a threat to them by making them transparent to state power. Some of the world’s oldest democracies have for that very reason ruled out issuing their populations with mandatory ID cards. Taavi Kotka, a senior Estonian official and one of the leading lights behind the e-Residency program, which attempts to recruit other countries’ citizens to a limited set of e-Estonia’s applications, says these countries deny their citizens “hassle-free services.” This suggests an inability on the part of the Estonian officialdom to properly appreciate the concerns associated with the rise of mandatory government- administered digital identities.

The same is true of Estonia’s president Ilves. In an April 2016 interview with the Guardian, Ilves blithely states that Estonia wants to give all its subjects “digital license plates.”

“Our goal is to make it impossible to do bad things,” he explains. “Our obsession with privacy is misguided,” Ilves says, explaining that the Estonian system is based on “trust.” The average Estonian citizen, unwilling and even unable to opt out from the web of e-government services, may have no alternative but to extend to the government the kind of “trust” expected of them. But Ilves’s imperviousness to the Orwellian implications of his own remarks would never go unchallenged in a Western society. Although digitally advanced, Estonia is a young democracy. It has in recent years struggled with high-level political corruption and problems affecting the separation of powers (with autonomy of the judiciary remaining a particularly weak spot as in other post-Soviet states).

Moreover, the obvious potential for Estonia’s own unchecked state to go digitally rogue is not the only—or even possibly the main—problem. Estonia remains in a constant tug-of-war with Russia. In 2007 the country came under a wave of debilitating cyber-attacks, which the government said ultimately originated from the Kremlin. In order to reduce its own digital exposure, Estonia has decided to “back up” its e-government data on British (or now, post- Brexit, possibly Luxembourgish) servers. Russia’s increasing offensive cyber-prowess is likely to cast a shadow on the EU IT agency headquarters located in Estonia which administers the bloc’s various sensitive Schengen databases (including those to do with the entry of third country nationals). Hosting NATO’s “center of excellence” on cyber-warfare, secured by Estonia after an aggressive PR campaign post-2007, could similarly turn into a vulnerability for the whole alliance. Compounding the potential digital problems, Estonia’s “analogue” front—to paraphrase Ilves, who juxtaposes digital and “analogue” lives of Estonians— has in recent years proven to be all too easily permeable to Russia’s security forces.

There are some notable successes, too, chalked up by e-Estonia. Largely on the back of Estonia’s growing reputation as an e-power, its former Prime Minister Andrus Ansip secured in the current European Commission the vice presidency responsible for the development of the EU’s digital market. Bringing down digital barriers and securing the free movement of digital goods as a fifth statutory EU freedom is one of the main planks of Estonia’s EU policy. Hand-in-hand with this ambition, Estonia positions itself as a haven for IT startups, making available for this purpose generous chunks of government funding. The IT sector currently yields around 5% of the country’s GDP. Appropriately, ensuring that high-speed internet access is available to all parts of the country is one of the government’s key priorities— although the economy’s relative stagnation from 2008 onwards has meant that neighboring Latvia has now overtaken Estonia as the Eastern European leading light in creating ultra-hi-tech fibre-optic broadband connections.

The jury remains out on Estonia’s e-residency program. Officially launched in 2014, it now has some 1700 paid up participants, with thousands more showing interest. The Japanese Prime Minister Shinzo Abe, alongside a number of other Western business and political dignitaries has been issued with an e-Resident’s ID card (Japan is interested in bringing out its own national digital ID card). However, like most Estonia’s e-initiatives beyond those meant to do away with red tape, the e-Residency project suffers from an incoherence of strategic vision with different ministries remaining at odds on key issues. Intended to give outsiders access to Estonian e-services—setting up Estonian companies, opening bank accounts, and using government-backed cryptography—it struggles when it comes to economic justification for either the Estonian government or its foreign participants.

Contrary to what was initially said, officials now maintain the scheme will offer no tax benefits to enterprises operating outside of Estonia. While Estonian e-Residency can be applied for via one of Estonia’s embassies abroad, making full use of it remains beset by “analogue” bureaucracy in a country still fundamentally wary of opening up to the world. Setting up an Estonian bank account requires a trip to the country. Setting up and operating an Estonian company is, until now, something that requires a local address, knowledge of Estonian, and/or the assistance of a local partner. The Ministry of the Interior, in particular, has been wary of e-Residency’s potential for money-laundering and fear it could encourage “analogue” immigration. After the UK’s Brexit vote, Estonian e-Residency was touted by some as a possible doorway into the EU for UK companies, but the government has taken no visible steps towards reorienting the service for such a purpose.

Overall e-Estonia remains a work in progress. Its undoubted instrumental value for ordinary Estonians is undermined by attempts to fashion it into something much larger—an identity-building instrument, requiring unquestioning “trust” on the part of the citizen in the unchecked benevolence of the state as part of what President Ilves calls a “Lockean contract.” This dilemma exposes an absence of strategic thinking at the core of the project. In practical terms, Estonia today is less a digital nation than a nation being institutionally digitized from scratch. Its citizens are less active “coders” of the state and more the passive beneficiaries of an increasingly top-down digital state. E-Estonia has undeniably revolutionized citizen’s expectations of the Estonian state, but it remains too early to say at what price.