Ask anyone what the most digitally advanced country
in the world is and it’s a safe bet that they’ll say either the US or China,
followed by Japan or even the UK. Not many would think of a tiny northern
European country in the former Soviet Block, but Estonia is a decade ahead of
other developed countries in terms of technological advancement.
Because of this, Estonian residents enjoy a range
of benefits. All residents are issued an ID card that offers access to around
4,000 services – allowing them to manage their finances, register businesses,
pay parking tickets, order prescriptions and even vote – entirely online.
With a population of only 1.3 million, Estonia’s forward-looking approach to digital technology is partly due
to its small size. As Siim Sikkut, digital policy adviser for Estonia, told the Guardian in 2014: “Estonian government and society
have always understood that as small economy, we have to be open to the world –
especially in trade and investment.”
It’s in this context that Estonia has become the
first ever country to offer e-residency
permits to any world citizen.
Benefits of an e-identity
As a government-issued digital identity, the
program allows non-Estonians access to Estonian services such as company
registration, banking, payment processing and taxation.
The benefits of this are that any entrepreneur or
freelancer running a “location-independent international business” can enjoy
low startup and maintenance costs; 0% income tax until distributions are made;
minimal bureaucracy; and inclusion in the EU’s legal framework – all whilst
remotely administrating their businesses from anywhere in the world.
However, as advantageous as this is – as well as
groundbreaking – the concept of a government-issued digital identity has come
under much scrutiny in the past, with many expressing concerns over its
security and others seeing it as a threat to personal privacy.
Ensuring data-security
The Estonian government ensures security of its
citizen and e-resident database by using a government-run technology
infrastructure called the X-Road. Launched in the 1990s, the X-Road is not a
centralized database; rather, it links public and private databases to the
country’s digital services. As such, it has no central gateway or hub. The
network therefore remains safer because information is kept on separate
servers.
So far the system hasn’t experienced any major data
breach. However, in 2009, Estonian web servers were subject to
sustained attacks for weeks when huge amounts of traffic, instigated
by infected machines, overwhelmed the country’s systems. Although this wasn’t
due to a security gap or glitch in the system, attacks of this sort can be a
major inconvenience … or worse.
During a speech in October 2014, Andrus Ansip, Estonia’s
former prime minister and current vice president for the digital single market
at the European Commission, said: “We have to protect everyone’s privacy,
trust is a basic principle. If people can’t trust e-services, they will never
use them.”
Estonian residents are given peace of mind in the
form of 2048-bit public key encryption on all ID cards. In addition to this,
Estonians have complete control over their personal data, with full
transparency over who has accessed their information available in their online
portal. If individuals see activities that they do not like or did not
authorize, they can report these activities to the data ombudsman, who is then
required to justify the intrusion.
The economic benefits of an e-society
One reason why Estonia is one of the most
successful e-societies is historical. After the collapse of the Soviet Union in
the 1990s, the newly independent nation found itself in the position where it
desperately needed to modernize.
Lack of physical infrastructure and a small
population meant that the Estonian government turned to the internet, embedding
digital solutions into the foundations of the country’s infrastructure.
Estonia’s growth as an independent state is therefore entwined with the digital
revolution; its citizens are very open to digital technology; and the Estonian
government is not tasked with convincing a population of sceptics on the
benefits of an e-identity.
When looking at Estonia’s track record, it would be
hard to argue that this open attitude to technological progress doesn’t have
significant economic and social benefits — Estonia is notably
the least corrupt and most prosperous of all the post-Soviet countries.
Taking Estonian services international by becoming
the first country to extend e-identities to non-nationals is only the next step
in ensuring a prosperous future. By creating an electronic diaspora that now
has a stake in the country’s progress, Estonia is cleverly shoring up its
future in the complicated digital and economic landscape.