Toomas Hendrik Ilves, who presided over Estonia from 2006 to 2016, is renowned for his pivotal role in the country’s digital transformation. As a keynote speaker at the upcoming Sphere conference in Helsinki, taking place on 28 to 29 May, Ilves shares insights into how such advancements can also benefit Luxembourg, highlighting the blend of challenges and successes Estonia faced on its journey to becoming a digital leader.
Paperjam: In terms of digital transformation, where does Estonia stand compared to other EU countries?
Toomas Hendrik Ilves: Estonia is often considered a leader in digital governance within the EU. Our low corruption rates and high efficiency in public services are testaments to this. It’s debatable whether our success is due to cultural factors--our Nordic influences--or our digital advances, or perhaps a combination of both. However, the contrast is stark when compared to many European countries, especially those with similar post-communist legacies. The adoption of digital systems has not only streamlined operations but also fostered a transparent, accountable administrative environment that is less susceptible to corruption.
Generally speaking, what were the main drivers and obstacles towards the digital transformation of the Estonian state?
The main obstacle was poverty. In the early 1990s, the cost of a computer was astronomical compared to our GDP per capita. So, we focused on making technology accessible, particularly through schools, because personal ownership was out of reach for most. This wasn’t a political issue; it was purely financial. On the other hand, a key driver was our desire to overcome Soviet-era backwardness and catch up with our neighbour, Finland. Their existence and progress spurred us on. The general attitude towards modernisation was very positive, which helped us advance quickly once we overcame the initial financial hurdles.
Did you encounter any resistance during this transformation? What efforts did this require from the Estonian administration itself?
Proposals for digitisation were initially met with fear that they would destroy Estonian culture or language. However, as digital initiatives like e-government and digital prescriptions were implemented and people saw the benefits, opposition faded. Interestingly, this fear of digital IDs and government overreach is still prevalent in English-speaking countries, unlike in Estonia, where these systems have become a foundation for our high level of public services. Our educational system, for instance, is among the best in the Western world according to PISA (Programme for International Student Assessment) scores.
I believe we've managed to enhance privacy through our digital systems.
Is there a tradeoff between efficiency of the administration on one side and protection of private sphere, private life, and private data on the other side?
Interestingly, I believe we’ve managed to enhance privacy through our digital systems. Take the example of Michael Schumacher and his accident. All his medical data leaked almost instantly to the media in Europe. That couldn’t happen here in Estonia. Every access to medical records is logged, and only a specific set of medical professionals have access. This mutual reciprocal transparency ensures that I know who checks my records, enhancing both privacy and trust. I once caught a journalist snooping through my property records because our system logs and shows who accesses what data. In Estonia, the real concern isn’t privacy as much as data integrity. For instance, the incorrect alteration of medical records or financial data could have life-threatening or severe financial consequences. Since 2008, we’ve safeguarded this with technologies like keyless signatures and permissioned blockchain.
How does Estonia ensure that these digital systems don’t become tools for unwarranted surveillance or misuse?
Our approach is deeply rooted in rule-of-law principles. We have very stringent laws regulating who can access data and for what purpose. Moreover, any misuse or abuse of data is quickly detectable and punishable. This strict framework prevents potential surveillance issues and ensures that the digital infrastructure serves the citizen without compromising their rights. Our systems are designed to enhance service delivery while upholding individual freedoms and security, which is essential for maintaining public trust in digital governance.
If you look at the transformation of the Estonian state and if we try to take stock, beyond the interface between the citizens and the administration, to what extent has the efficiency of the administration itself improved?
The improvement in efficiency is multifaceted. Not only do things simply work better and cheaper with fewer staff, but also, petty corruption has been virtually eliminated. When transactions are digitised and transparent, it’s hard for corruption to take root. This digital transparency ensures that tasks that used to require informal payments to bureaucrats just don’t exist anymore. This is a significant shift from the traditional practices observed in post-communist and developing countries.
How has productivity within the public sector evolved?
Measuring productivity in public services is complex, but let’s talk about how digitisation transforms traditional processes. Historically, bureaucratic processes were sequential--each step followed the next. Digital tools allow these steps to occur in parallel, speeding everything up significantly. For example, when a child is born in Estonia, a series of registrations happen automatically--from issuing a birth certificate to enrolling the child in the health insurance system--without the parents needing to visit multiple offices. This not only boosts government efficiency, but also dramatically simplifies the citizens’ side of things. About 99.9% of prescriptions in Estonia are digital, which means nearly no one has to carry paper prescriptions. This kind of efficiency is hard to quantify but immensely improves daily life.
The main current challenge for the government in Estonia is leveraging AI effectively.
Do you consider this digital transformation as an ongoing process?
Absolutely, it’s very much ongoing. Right now, we’re pushing for something like a digital Schengen within Europe, where, for instance, I could receive medical care seamlessly in Greece. Moreover, we’re deeply invested in integrating AI to provide predictive services, fundamentally rethinking how AI can function as government-as-a-service. Take our approach to business reporting: traditionally, businesses must file quarterly reports. With our system, all transactions are done online through the tax agency, which enhances transparency, eliminates the need for a traditional accountant and allows for real-time financial advice. This AI-driven system can prompt businesses to adjust practices or even suggest tax breaks to ensure sustainability. This is a prime example of proactive, intelligent government service.
And what is the main current challenge for the government in Estonia?
The main challenge is leveraging AI effectively. While Estonia might be ahead due to our digital maturity, figuring out how to best utilise AI to enhance service quality remains a universal challenge. Our goal is not just to implement AI, but to use it in a way that genuinely improves the lives of our citizens and the efficiency of our services. It’s about smart integration, where AI supports proactive governance and makes a tangible difference in administrative efficiency and service delivery.
Considering the global landscape, where do you see Estonia in the next 5 to 10 years in terms of digital governance?
Estonia aims to remain at the forefront of digital governance by continually updating and improving our systems. We anticipate broader adoption of AI and machine learning to streamline processes and make government services even more efficient. Additionally, we are focusing on expanding our digital education programs to ensure that our citizens are well-prepared to thrive in an increasingly digital world. Looking globally, I see Estonia not just maintaining its lead but also helping other nations develop their digital infrastructures, sharing our lessons and technologies.
Finland switched to our system after initially planning to spend ca €600m on a commercial product.
What can a country like Luxembourg, a small country like Estonia, learn from the Estonian experience?
Just do it! The process isn’t as daunting as it might seem. You already have the EIDAS (E-ID and Signature) directive which mandates digital identities, so the key is ensuring everyone actually has one. As for the technical architecture, we provide ours for free--it’s open source. Our X-Road system is an example of this. It’s essentially part of our foreign assistance, given not only to developing nations like Panama and Costa Rica but also to other countries seeking digital solutions without the exorbitant costs. Finland switched to our system after initially planning to spend ca €600m on a commercial product. They found that our open-source solution met their needs effectively. So, Luxembourg can take advantage of this readily available technology and the legal frameworks already in place for digital IDs. Plus, we’re always ready to help; you can just call us, and we can assist in deploying these systems in Luxembourg.
As a leader during much of Estonia’s digital overhaul, what advice would you offer to other countries, like Luxembourg, aiming to enhance their digital infrastructure?
The key is to address practical concerns and ensure that technological solutions align with public needs. For Luxembourg, there’s a lot to learn from our approach of integrating technology with daily government services and making sure it’s accessible. Start small, ensure there’s a solid infrastructure and educate the public about the benefits. Also, it’s crucial to address any cultural fears about technology eroding traditional values or privacy. Transparency and clear communication are essential.
Lastly, what are your expectations for the Sphere conference in Helsinki where you’re speaking?
I’m excited about the Sphere conference as it brings together leaders and innovators from various fields to discuss technology, governance, and societal change. My hope is that by sharing Estonia’s journey, we can inspire other nations to embark on their own digital transformations, learning from our experiences and adapting them to their unique circumstances. I particularly look forward to engaging with counterparts from countries at different stages of their digital evolution and discussing potential collaborative initiatives.
This article was originally published for .