In the 1990s, Estonia emerged from decades of Soviet oppression, a backward nation lacking in wealth, natural resources, and even landline phones and personal computers.
But where some might have dwelled on hardships, Estonians saw opportunity.
“Having a clean slate allowed us to not constantly develop the candle into the light bulb,” said Anna Piperal, Estonia’s ‘e-ambassador,’ “but just skip all of that and leapfrog into the new technologies.”
Leapfrog indeed. Today, tiny Estonia (smaller than the combined area of Vermont and New Hampshire) is among the most digitized nations on earth. It boasts 88 percent fast-broadband coverage, along with smart lighting, smart traffic, smart buildings — smart, just about everything. (Also read Cisco’s exclusive research on digital cities.)
But it’s Estonia’s innovations in government services that really set it apart. Ninety-nine percent of those services are online — fast, secure, and easy to use. Other governments are taking notice; for example, Gina Raimondo, Rhode Island’s forward-thinking governor, has called Estonia’s services the “gold standard.”
To name but a few benefits, Estonians can vote online from anywhere in the world, file their taxes in five minutes, and start businesses with a minimum of bureaucracy. All while enjoying seamless, highly transparent access to data — their own and the government’s.
“I wouldn’t say we are more trusting or more tech savvy people,” Piperal said. “It’s the tech-savviness and the comfort that comes with a positive practice. Just overall technology that makes people’s lives easier because they don’t have to be IT specialists to use the services.”
That technology makes ample use of Estonia’s number one resource: brain power.
While companies like Cisco and Ericsson contribute to Estonia’s network infrastructure, the majority of its e-solutions are home grown. Estonian startups are innovators in blockchain and crytopgraphy, for example, and beginning to impact the world stage.
“We have just 1.3 million people living in the country,” said Lauri Makke of Cisco Estonia. “So, from that sense it’s easy to build up really good, new IT infrastructure. And together with that technology, the idea was to make everything possible, through the IT services.”
Power (and Data) to the People
From the start, the Internet was seen as the key to Estonia’s future.
Added Piperal, “There’s no oil, gas, or gold here, so we had to be super-efficient about building a capitalism of our own.”
At the heart of Estonia’s success is its seamless integration of data. Every citizen has a secure digital ID card, while a common data-exchange platform called X-Road interconnects all government agencies.
All of which demanded political will — along with an underlying assumption that people, not governments, own data.
Every citizen has a secure digital ID card, while a common data-exchange platform interconnects all government agencies.
“The secret of getting it done and becoming digital,” Piperal emphasized, “is not in the financial state of the country or the technologies that you choose to use. It’s about digital leadership and whether it is possible to change the legislation that supports all of that.”
In Estonia’s case, digital signatures became law in 2000. As Piperal explained, “any document can be digitally signed and then just emailed. The whole government had to accept these types of documents, and this simplified a great deal of things.”
Makke, for one, lauds the results. “Whatever information I need about myself,” he said, “about the properties I own, the dates of my driver licenses, my health records or whatever, I log in and I get all the information needed. And I can share it with my doctor, I can print it, I can do almost everything integrated with the country very easily.”
A Red Carpet for Global Entrepreneurs
Estonia’s unique approach to capitalism includes a concept called e-residency, first offered in 2014. It allows foreign entrepreneurs to establish and run startups in Estonia, without ever stepping foot in the country. It’s a borderless, paperless approach to business that slices red tape around taxes, regulations, contracts, and so on.
“E-residency is our gift to the world,” said Piperal. “With the E-residency card that they get in their local embassy, after an application process, they can establish a company in Estonia, in the European Union, and have access to financial service providers and not have to come to Estonia if they don’t want to.”
It’s also lucrative for Estonians. Deloitte estimates that by 2021 the program will drive 31 million euros in net income and 194 million euros in indirect socio-economic net benefits.
In effect, Estonia is exporting the digital convenience that extends to all aspects of Estonian life.
“Our ultimate dream is a zero bureaucracy,” Piperal stressed. “To create invisible services to people. If you need something, then you will just get it. If you’re entitled to more pension you will get more pension. If you’re entitled to your mother’s salary, then the state offices will exchange data, they will calculate how much money you should be getting and you will just get it.”
Trust but Verify
As Estonians know too well, one well-planned security breach can wipe out years of progress. In 2007, they fell victim to a massive state-sponsored cyberattack, widely believed to have come from Russia. It crippled nearly all government services, media outlets, and financial institutions.
It was also a major wake-up call, in that Estonians realized they had no response plan.
“The biggest takeaway,” said Piperal, “was that there was no agenda. There was no regulation, like who tells who what to do, or who is making the decisions.”
Today, the Tallinn Manual, written by a consortium of experts from Estonia and its NATO allies, is recognized as a key guide for responding to such attacks.
And Estonia has become a leader in security technologies, including blockchain, the tamper-proof distributed ledger used as a platform for Bitcoin and other cryptocurrencies.
While Piperal is quick to clarify that not all of Estonia’s data is on a blockchain, they have pioneered applications that verify digital fingerprints.
“Our blockchain is drastically different from Bitcoin,” she said, “because we don’t record the data into the blockchain, we just record the fingerprints of the data…. So, having this fingerprint, the piece of data and the signature, we can actually know if the integrity of the data and rules or log files is the same. It’s a super-scalable solution.”
Still, the lessons of 2007 loom large. Today, Estonia is implementing a pilot program to create a “data embassy,” in Luxembourg. Essentially a backup on diplomatic soil, the program would maintain Estonians’ data integrity in any event.
“Most of the critical data is now being transported there,” Piperal said. “And of course, blockchains can make sure no one is tampering with it. The plan is to build a network of data embassies. Because we don’t have tornadoes, fires or volcanoes, but we do have neighbors.”
As for the future, Estonia keeps a close eye on emerging technologies like AI and machine learning.
“I think it’s a great success story,” said Makke, “but there are things that can be much, much better still.”
For Piperal, those new technologies are all about driving ever-greater benefits for Estonians.
“This will be a game-changer,” she concluded, “because people will really feel that they are cared for. Like in a brilliant hotel room that just has everything you want.”
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