E-residency set up kit for Estonia's e-government programme. Handout.
Pioneer: Estonia has a rich IT legacy

The hordes of stag and hen parties downing cheap booze in Estonia’s capital Tallinn may not know it, but they are enjoying their pre-marriage celebration in a technologically trailblazing country.

In the past two decades, the tiny north Europe country has become a pioneer of converting public services into online solutions for its citizens.

The Baltic state of 1.3m people was the first country to allow its citizens to vote online in national elections. Its online tax system allows people to file returns in as little as three minutes.

When Estonia regained independence from the Soviet Union in 1991, it was a relatively poor country with a rich legacy of IT.

During the cold war with the US and its western allies, the Soviet Union invested heavily in technology, including in the space race. In 1957, the Soviets sent the first human-made object into space: a satellite called Sputnik.

“All the inner electronics of . . . Sputnik was from Tallinn,” says Wolfgang Drechsler, professor of governance at Tallinn University of Technology. “In the Soviet Union, any type of development was heavily regionalised. IT stuff was in Tallinn.”

This IT legacy evolved in the mid-1990s as Estonia’s government began to build the foundations for today’s e-services. It created a population database, which included an individual’s name, ID code, date of birth and place of residence.

It also developed an online identity system and digital signatures that enables citizens to easily verify themselves when performing online tasks such as voting and banking.

E-residency set up kit for Estonia's e-government programme. Handout.

The backbone of Estonia’s online public services is a data-exchange platform called “X Road”.

The open-source software, built in 2001 by the government, enables state organisations and businesses to exchange and store data securely. More than 3,000 services can use it, Estonia’s government says. The technology is used by other countries including Finland, Iceland and Japan. X-Road is a way of “centralising” people’s digital identity, says Mr Drechsler.

One of its benefits is that Estonians do not have to re-enter data when using public e-services, such as filing a tax declaration or dealing with the police.

Most of the information needed for filing a tax return, such as salary, social security contributions and property assets, is pre-filled, says Arthur Mickoleit, an expert in digital government at Gartner, a research company. “Few other countries automate as much of the tax system as Estonia,” he says.

As well as shrewd investment in technological infrastructure, Estonia’s digital transformation has been aided by its small population harbouring a high degree of trust in its government, experts say. This is crucial for the development of e-services because citizens must be happy to give their government access to their personal data.

However, Estonia’s digital transformation has not been without setbacks. In 2007, cyber attacks against Estonia (which some experts blamed on Russia) took down its banks, media, telecoms networks and government services.

A decade later, scientists found a security vulnerability in Estonia’s ID card system, which its government had proclaimed to be the world’s most advanced.

The threat — which could have enabled hackers to access sensitive information — affected 800,000 ID cards.

Although Estonia’s government acted quickly to remedy the security problem, there are questions about the country’s status as a digital leader.

In the UN’s 2018 survey on e-government services, Estonia was in 16th place, behind first-placed Denmark.

One reason for the slippage may be a lack of innovation compared with other countries.

“[Estonia] prioritised the engineering part of [e-services] and had maybe a little less space for innovation and out-of-the-box thinking,” says Mr Mickoleit.

He says Estonia is below average in an OECD global survey that ranks government data on its availability, reliability and role in “digital transformation”.

France is one of the leaders for “open data” because it has been innovative in its use of technologies such as big data and artificial intelligence in the public sector, Mr Mickoleit says.

The Estonian government says it wants to adopt a start-up-like culture where innovation is encouraged through trialling technologies in small projects. “It’s about allowing safe spaces for experimentation . . . and allowing for the possibility of small but controlled failures in some of those areas,” says Siim Sikkut, government chief information officer of Estonia.

Mr Sikkut notes that Denmark’s government has created a digital “disruption council” as governments try to work out how to deal with uncertainty and opportunities created by new technologies including artificial intelligence, “big data” and blockchain.

“Technology and engineering will only get you so far,” he says. “What’s happening now in the public sector is [digital] disruption.”

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