CRF Blog

The Digital Republic

by Bill Hayes

In The Digital Republic for the New Yorker, Nathan Heller looks at how Estonia has gone fully digital.

It was during [Taavi] Kotka’s tenure [as the country’s chief information officer] that the e-Estonian goal reached its fruition. Today, citizens can vote from their laptops and challenge parking tickets from home. They do so through the “once only” policy, which dictates that no single piece of information should be entered twice. Instead of having to “prepare” a loan application, applicants have their data — income, debt, savings — pulled from elsewhere in the system. There’s nothing to fill out in doctors’ waiting rooms, because physicians can access their patients’ medical histories. Estonia’s system is keyed to a chip-I.D. card that reduces typically onerous, integrative processes — such as doing taxes — to quick work. “If a couple in love would like to marry, they still have to visit the government location and express their will,” Andrus Kaarelson, a director at the Estonian Information Systems Authority, says. But, apart from transfers of physical property, such as buying a house, all bureaucratic processes can be done online.

Estonia is a Baltic country of 1.3 million people and four million hectares, half of which is forest. Its government presents this digitization as a cost-saving efficiency and an equalizing force. Digitizing processes reportedly saves the state two per cent of its G.D.P. a year in salaries and expenses. Since that’s the same amount it pays to meet the NATO threshold for protection (Estonia — which has a notably vexed relationship with Russia — has a comparatively small military), its former President Toomas Hendrik Ilves liked to joke that the country got its national security for free.

Other benefits have followed. “If everything is digital, and location-independent, you can run a borderless country,” Kotka said. In 2014, the government launched a digital “residency” program, which allows logged-in foreigners to partake of some Estonian services, such as banking, as if they were living in the country. Other measures encourage international startups to put down virtual roots; Estonia has the lowest business-tax rates in the European Union, and has become known for liberal regulations around tech research. It is legal to test Level 3 driverless cars (in which a human driver can take control) on all Estonian roads, and the country is planning ahead for Level 5 (cars that take off on their own). “We believe that innovation happens anyway,” Viljar Lubi, Estonia’s deputy secretary for economic development, says. “If we close ourselves off, the innovation happens somewhere else.”

“It makes it so that, if one country is not performing as well as another country, people are going to the one that is performing better — competitive governance is what I’m calling it,” Tim Draper, a venture capitalist at the Silicon Valley firm Draper Fisher Jurvetson and one of Estonia’s leading tech boosters, says. “We’re about to go into a very interesting time where a lot of governments can become virtual.”

Previously, Estonia’s best-known industry was logging, but Skype was built there using mostly local engineers, and countless other startups have sprung from its soil. “It’s not an offshore paradise, but you can capitalize a lot of money,” Thomas Padovani, a Frenchman who co-founded the digital-ad startup Adcash in Estonia, explains. “And the administration is light, all the way.” A light touch does not mean a restricted one, however, and the guiding influence of government is everywhere.

As an engineer, Kotka said, he found the challenge of helping to construct a digital nation too much to resist. “Imagine that it’s your task to build the Golden Gate Bridge,” he said excitedly. “You have to change the whole way of thinking about society.” So far, Estonia is past halfway there.

One afternoon, I met a woman named Anna Piperal at the e-Estonia Showroom. Piperal is the “e-Estonia ambassador”; the showroom is a permanent exhibit on the glories of digitized Estonia, from Skype to Timbeter, an app designed to count big piles of logs. (Its founder told me that she’d struggled to win over the wary titans of Big Log, who preferred to count the inefficient way.) Piperal has blond hair and an air of brisk, Northern European professionalism. She pulled out her I.D. card; slid it into her laptop, which, like the walls of the room, was faced with blond wood; and typed in her secret code, one of two that went with her I.D. The other code issues her digital signature — a seal that, Estonians point out, is much harder to forge than a scribble.

“This PIN code just starts the whole decryption process,” Piperal explained. “I’ll start with my personal data from the population registry.” She gestured toward a box on the screen. “It has my document numbers, my phone number, my e-mail account. Then there’s real estate, the land registry.” Elsewhere, a box included all of her employment information; another contained her traffic records and her car insurance. She pointed at the tax box. “I have no tax debts; otherwise, that would be there. And I’m finishing a master’s at the Tallinn University of Technology, so here” — she pointed to the education box — “I have my student information. If I buy a ticket, the system can verify, automatically, that I’m a student.” She clicked into the education box, and a detailed view came up, listing her previous degrees.

“My cat is in the pet registry,” Piperal said proudly, pointing again. “We are done with the vaccines.”

Data aren’t centrally held, thus reducing the chance of Equifax-level breaches. Instead, the government’s data platform, X-Road, links individual servers through end-to-end encrypted pathways, letting information live locally. Your dentist’s practice holds its own data; so does your high school and your bank. When a user requests a piece of information, it is delivered like a boat crossing a canal via locks. [more]