How Innovation Lifts Estonia Into Europe’s Big Leagues

By Ben Rooney (November 1, 2011)

Technological innovation and the financial crisis could force long-held European attitudes to change and push bigger European countries to drop their “smug” approach to smaller states, the president of Estonia said Tuesday.

“I think between the crisis and the innovation, the old mental geography of Europe has to end,” President Toomas Hendrik Ilves said in an interview ahead of the London Cyber conference, which opened Tuesday. “This kind of smug, patronizing attitude that countries like mine experience, when in fact we are far more innovative than many old countries.”

He tells a story about an encounter earlier in his career. “I remember when I was Minister of Foreign Affairs, a fairly senior person from an “old” European country came to see the foreign ministry.

“His jaw dropped to see all the innovation we had made in technology. He said he was going to send a delegation right away to see what we were doing.

“I saw the ambassador a couple of weeks later and asked him about the delegation. ‘Well, you know, our people don’t believe that one of your kind of countries can do this.’ ”

Mr. Ilves said he sees technology as a way of combating Estonia’s biggest problem: its size.

“We are too small,” Mr. Ilves said. “This [technology] is our solution. We can increase our functional size by giving to machines anything that they can do that humans are doing, so that people can do other things.”

Estonia, one of the three Baltic states and the only one in the euro zone, has a population of only 1.3 million.

Mr. Ilves said a personal turning point was when he read the book “The End of Work,” by Jeremy Rifkin. “He told the story of a Kentucky steel mill that produced x-amount of steel with 12,000 workers. The plant was sold to a Japanese company and automatized. It produced the same amount of steel with only 120 employees, and I thought, that is what we have to do.”

The country has pushed ahead with numerous tech initiatives. Although he was not elected by electronic ballot –it was introduced the year after his poll–”we have had e-voting since 2007. Some 25% of the population voted electronically.” It also passed a digital signature act, a legally binding method to sign any legal document with notary power. Citizens can also access online pre-filled tax returns and their health records from anywhere in the world.

“These are transformative technologies,” he said.

Tallinn’s embracing of technology was also driven by its time under the oppressive Soviet Union.

“We came out of this miasma of the Soviet Union. Building the physical infrastructure of a modern state is going to take us a long time. It does not matter if you are capitalism or communism, it is going to take a long time.

“However, and this was the beginning of the Internet, we saw that you could build things much more quickly.”

When Estonia won back its independence, Mr. Ilves said he had to fight hard to avoid the temptation to take legacy equipment. “The city of Helsinki offered us their 1970s telephone exchange, because Tallinn had a 1938 exchange. They wanted to give it to us free but I said don’t take it.

“What we did was avoid all that and put in the newest stuff.

“We had digital telephony across the country in 1998. When I was ambassador to Washington I had a worse connection to the State Department two miles away than I did to Tallinn, which was 5,000 miles away.”