The future of digital democracy may be coming from an unlikely source, as the small Baltic country of Estonia has just created one of the most advanced e-societies in the world. Estonia, or E-stonia, is making its mark on the world by embracing new technology and creating its own virtual state. With over 4,000 online services including e-residency, e-health, e-voting and a paperless e-cabinet, has E-stonia found the next big thing for governments?
In a time when the world’s most powerful countries are trying to remain competitive in a globalised world, the tiny Baltic state of E-stonia has emerged as an unlikely front-runner. Despite its modest population of 1.3 million inhabitants, Estonia’s Internet ambitions and capabilities surpasses most. The government has proclaimed Internet access a human right, and free Wi-Fi (the world’s fastest) is available almost nation-wide. Programming is taught to Estonian students from first grade and the country is a world leader in tech-firm start-ups. Will E-stonia be the new Silicon Valley?
Digital democracy is now the best thing since sliced bread for Estonians, as they have embraced technology like never before. The Estonian government has sought to make all its traditional functions available online, which means E-stonia can function as a country without the need for a physical space. Online voting in general elections is already possible and utilized by about a third of the country. The number of public services accessible online has also been rapidly increased to above 4000. Each citizen is provided a digital ID-card to facilitate usage of these services and enable things like electronic authorisation and digital signatures.
E-stonia’s ambitions for a digital future goes well beyond just making traditional services available online. E-stonia has now undertaken a new revolutionary step in terms of e-governance. As of 2014, Estonia, as the first country in the world, offers the possibility of any foreigner above 18 years old to become an Estonian E-resident. The project initially started off as a way of facilitating provision of government services for Estonian citizens living abroad, but was soon expanded to also incorporate foreign citizens, looking for a digital identity. Although still in its testing phase, this project has attracted much attention around the world, both from prospective E-residents and the media. So far, over 10,000 people have signed up for the service.
E-residency does not equate to Estonian citizenship, but it does allow foreign entrepreneurs to establish Estonian firms, without having to occupy any physical space in Estonia. Although this in itself is an important theoretical development, the practical relevance is even greater. This is because non-EU citizens who are e-residents can access the EU free market. This new Estonian initiative hence opens up an interesting way for foreign businesses to enter Europe. This has generated considerable attention abroad, especially from India.
Does e-residency change the game?
Companies worldwide already have the chance of establishing themselves in a different country to where they actually do business. Commonly this is done for legal reasons or tax purposes. However, what is new for the Estonian E-resident initiative is that it simply removes the requirement of physical space from the equation. Through this, a company can be registered in Estonia, even if no employees or business action takes place on Estonian soil.
E-residency has the potential of providing a substantial boost to the Estonian economy. First of all, revenue could be directly raised through corporate taxes for firms that choose to establish themselves in Estonia. Secondly, some estimations expect the number of Estonian residents to increase by 10 million e-residents within the next decade. Thirdly, the initiative is estimated to create $565 million USD in registration revenues alone. For a country with only 1.3 million inhabitants this could have a massive impact on the Estonian economy. Money is not the only river though, as hopes are high that this step will strengthen the country’s reputation as a world tech leader.
Currently, a prospective E-resident has to visit Estonia in order to apply. However, there are plans to abolish this step, as in the future applications could be launched from Estonian embassies abroad. This would remove the need for e-residents to visit Estonia entirely.
The increased governmental online presence and active usage of embassies may also have national security benefits. Estonia is now exploring the option of moving its entire e-government into the cloud through servers based out of its embassies in other countries. This tactic would allow Estonia to continue operating as a state even if its physical territory was ever seized—ensuring uninterrupted delivery of all its prior services to Estonians and, for that matter, its virtual citizens.
Naturally, there are risks with putting everything online, as this development has made Estonia more vulnerable to hackers and cyber-terrorism. Storing personal and business information in a central register is also something that has been criticized by privacy advocators. Furthermore, this move could expose Estonia to fraudulent individuals, as less face-to-face contact is required to use governmental services. However, there is no denying that Estonia has highly ambitious plans for its digital future, as it begins its revolutionary step towards reinventing the relationship between government and citizens.