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Estonia Economy

The UN Panel on Digital Cooperation presented last week in New York its final report, and an old question is back on the international agenda:  Could the global Internet be ordered by a reasonable arrangement among stakeholders which would maximize the digital opportunities and minimize the cyber risks by keeping the network free, open and safe?

Since the days of the UN World Summit on the Information Society (WSIS/2002–2005) dozens of commissions, task forces and working groups have proposed declarations, compacts and frameworks which meanwhile fill a whole library. Some of those documents were useful, as the Tunis Agenda (2005) and the NetMundial Declaration (2014), others are forgotten. The Internet Governance Ecosystem is a very dynamic space and in a permanent status of change. A quarter of a century ago, the Internet was seen mainly as a technical issue with some political and economic implications. Nowadays, it is a political and economic issue with some technical components. And the global digitalization does not stop with artificial intelligence, the Internet of Things and 5G at the horizon.

Insofar, UN Secretary-General Antonio Guterres did the right thing in July 2018 when he appointed a high-level panel of 20 experts with a mandate to look into the latest digital developments, to analyze the illnesses of today's cyberspace and to propose how to cure some weaknesses of the Internet. The group was led by an American woman — Melinda Gates from the Microsoft Foundation — and a Chinese man — Jack Ma from Internet giant Alibaba. Now, after one year of discussion, the group came forward with another proposal: A Declaration for Digital Interdependence. Like many of its predecessors, the final report presents an excellent diagnosis. Whether the recommended therapy will meet the same high standard, however, is another matter.

Moving forward into a digital disaster?

The Internet world is vulnerable. This is part of its history. The fathers of the networks wanted one thing above all: to send data from A to B without limits and borders. Security was not a priority. Insofar, the Internet pioneers did not differ from the pioneers of the automobile world. Only when the number of car crashes escalated, thousands of people died, and considerable economic damage arose, legally binding traffic rules were introduced, safety barriers were built on highways and vehicles got seat belts, airbags, and catalytic converters. Yet still, 1.2 million people die every year on the road.

The Internet is not about life and death. The Internet is about power and money. But even there, dysfunctions of the network can cause high damages, divide societies and drive the global economy into a ruinous downward spiral. And the consequences of the pollution of our mental environment, of incitement, censorship, and surveillance can be seen in the recent cultural decline of our political debates. Can democracy survive the Internet, asked Nathaniel Persily from Stanford University already in 2017. And this was and is a good question.

With nearly five billion people online and trillions of objects connected, the one world we live in with its 193 jurisdictions is a global village, regardless of the recent waves of neo-nationalism and the building of new borders. And since everything is connected to everything, the windows of vulnerability grow with each further growth of the network. No one can predict exactly what the consequences of deploying an autonomous, Internet-based weapon system will be in a hybrid war. Nobody knows what will happen if sand gets into the transmission of the free flow of data, which is seen now as the oil of the 21st century. And nobody knows what will happen if IP addresses and domain names are confused and servers and routers no longer do what the internet protocols tell them. The UN panel's wake up call is very clear: If you let everything go, mankind is marching into a digital disaster that can have worse consequences than climate change.

For a new multilateralism

The experts — including French Nobel laureate Jean Tirole, former Swiss President Doris Leuthard, Estonia's ex-Foreign Minister Marina Kaljurand, the father of the Internet Vint Cerf and former ICANN's CEO Fadi Chehade — give five recommendations: Everyone should be online and enabled by 2030 to benefit from the advantages of the digital age. Human rights, security and trust in cyberspace should be strengthened, and appropriate mechanisms for global digital cooperation created. The implementation of the recommendations should be based on nine universal values as, among other things, respect, humanity, transparency, sustainability and harmony. Everyone should commit to a "Declaration of Digital Interdependence." And for the envisaged "mechanisms of digital cooperation," three models will be put up for discussion.

That sounds good, but it also seems like a little bit of the wheel was just being reinvented. However, if you look more closely, then you must pay tribute to the group that in these turbulent times they put forward proposals that can shake the foundations of the stalemate of international politics indeed — at least in the medium term. Yes, the devil is in the details, but in the 47-page report, the innovation is also in the nuances.

The report sends a clear message that cyberspace needs some rules. However, the language of "smart regulation" is an interesting one. The group makes clear that the time of traditional international treaties, negotiated behind closed doors, is over. Of course, UN Secretary-General Guterres argued in favor of "Multilateralism" when he presented the report in New York. And he rejected any form of "Unilateralism" that carries the danger of fragmenting the Internet. But the UN Secretary-General also made it clear that the future of multilateralism must no longer be a matter for governments only, but also a matter for all non-state actors from business, civil society, and the technical community. His engagement for such an "innovative multilateralism" is reflected in the report which states clearly that "multilateralism" and "multi-stakeholderism" coexist and complement each other.

This statement reflects the truth of the Internet Governance Ecosystem. However, the reality is that many governments still prefer to bargain with each other. Of course, the multi-stakeholder principle is not new. It was launched at the UN World Summit on the Information Society in 2005. However, most governments have not yet gone beyond lip service with which they support the model "in principle," but ignore it, when it comes to hard decisions. The "sharing of decision making," as proposed by the WSIS definition of Internet Governance 15 years ago, is more the exception than the rule in Internet policymaking. Which government likes to share its power?

Insofar it is difficult to imagine, in the current world situation where we have technology wars among cyber superpowers, that such a participatory Internet Governance model, as envisaged by the report, has a realistic chance to get implemented soon. However, one can read the proposals also an agenda for the 2020s. History tells us, that the political pendulum is swinging backward and forward. And it is useful to have in bad times a plan for the good times. Nobody can exclude, that the wind, which is currently blowing in the direction of political confrontation, can turn in a different direction in the next decade. And the 2020s will be a decade of growing digital interdependence.

The proposals for ??a new global mechanism for digital cooperation are of a similar caliber. The report offers three options: 1. A distributed co-governance architecture, 2. A Digital Commons Architecture and 3. An extension of the Internet Governance Forum, called IGF Plus.

The IGF was created by the UN World Summit in 2005 as a multi-stakeholder discussion platform. The IGF has no decision-making capacity. Over the years, the IGF became useful as a reservoir of collective wisdom and a place for the clarification of many factual issues. However, it remained a paper tiger, because of no procedure channels for ideas that emerge at the IGF into the intergovernmental negotiations.

In 2005, when the IGF was established, the ITU was nearly the only intergovernmental organization which had a special interest in Internet issues. In the meantime, however, there is a multitude of intergovernmental Internet negotiations: the UN is dealing with autonomous weapon systems, state behavioral norms, and confidence-building measures in cyberspace. The WTO has started talks on digital trade. The UN Human Rights Council discusses freedom of expression and privacy in the digital age. ILO, WIPO, UNESCO, OECD, Council of Europe, OSCE, NATO and many other intergovernmental bodies have digital and cyber issues on their agendas. Even G7 and G20 are discussing now rules and norms for the development and the use of artificial intelligence. And although everything is connected to everything on the Internet, these negotiations take place in isolated interstate silos. Trade negotiators have little to do with arms control negotiators. And governmental bureaucrats sitting in the Human Rights Council have no real clue about the future of AI.

This, of course, is a significant deficit of the current system. An IGF Plus could help to bridge the existing gap between discussion and decision, to interconnect — probably via liaisons — these intergovernmental negotiations and to open doors for non-state actors to participate in an adequate way in this very decentralized negotiation processes.

Towards October 2020

The UN panel was wise enough not to push for quick adoption of its recommendations. Antonio Guterres announced the kick start of a global discussion process intending to raise awareness of the urgency of enhanced digital collaboration. A newly appointed UN Technology Envoy should help him with this. However, he also mentioned a deadline: October 24, 2020. This is the 75th anniversary of the founding of the United Nations and this would be a good date for the adoption of something like a "Multistakeholder Digital UN Call", with commitments not only from the 193 governments of the UN member states but also from the main stakeholders from the private sector, civil society, and the technical community.

By the way, on the road to the 75th UN anniversary, there is the 14th IGF, scheduled for November 2019 in Berlin. This is a good opportunity to add some more concrete proposals and to test whether the world is ready and open for innovation in Internet policymaking. At the 13th IGF in Paris, November 2018, the French president Macron offered several ideas which produced since that the "Paris Call" to strengthen trust and security in cyberspace and the "Christchurch Call" to reduce the misuse of the Internet for terrorist activities. Good steps, but more steps are needed. Why not use the Berlin IGF and to propose a "Multi-Stakeholder Pact to Protect the Public Core of the Internet"? Such a pact could become the first cornerstone in an emerging cybersecurity architecture which would add substance to the UN panel's proposal to work towards a "Global Commitment on Digital Trust and Security."

Written by Wolfgang Kleinwächter, Professor Emeritus at the University of Aarhus | 6/14/19

Apollo 11 was the spaceflight which landed the first two humans on the Moon. Commander Neil Armstrong and lunar module pilot Buzz Aldrin landed the Apollo Lunar Module, Eagle, on July 20, 1969. Armstrong became the first person to step onto the lunar surface six hours later, and Aldrin joined him 19 minutes later. The two astronauts spent about two and a quarter hours outside the spacecraft, and they collected 47.5 pounds of lunar material to bring back. Command module pilot Michael Collins flew the command module, Columbia, alone in lunar orbit while Armstrong and Aldrin were on the Moon's surface. Armstrong and Aldrin spent 21.5 hours on the lunar surface before rejoining Columbia in lunar orbit, and then returning to Earth. The documentary movie was fantastic and included never before seen footage.

I was two years out of engineering school at the time of the historic flight. Although I was not involved in any way, my employer, IBM, was one of the lead contractors. I was proud of that, but I remember being on the edge of my chair in fear. There were so many things which could go wrong. Imagine being strapped in on top of a three-stage rocket. The first stage was 138 feet tall, 33 feet in diameter, and full of liquid oxygen. The first stage provided over 7,600,000 pounds of thrust. While I was in fear, the three astronauts were fearless. They believed in the technology.

Speaking of fear, this week, the Los Angeles Times published "The vote-by-phone tech trend is scaring the life out of security experts". Vote-by-phone (and Internet voting) has been tested successfully by West Virginia and others. Estonia has been using it for more than a decade without issues. Vint Cerf, one of the fathers of the Internet, properly said, "We can do this." But the security experts are afraid like I was about Apollo 11 in 1969. It almost seems they enjoy being quoted in the press about all the things which could go wrong. We could put men on the Moon 50 years ago and a robot on Mars more recently, but we can't figure out how to vote electronically with security, privacy, and verifiability? Why aren't the "experts" willing to say we could do it if we planned carefully and took precautions A, B, and C?

The bottom line reason, in my view, is the experts compare Internet voting to a perfect online system which we will never ever have, and they are unwilling to compare it to the 150-year-old paper-based system of today which disenfranchises millions of voters. This morning, Axios reported the 2020 election turnout might be the biggest of all times. I am afraid. What I am afraid of is hours-long lines, broken 15-year-old voting machines, elderly people standing in line in inclement weather and damaging their health, ballots from overseas getting lost in the mail or arriving late and not counted, paper ballots in the U.S. not getting counted because something was wrong with the signature on the outer envelope, and thousands (or millions) of others who were unable to get to the polls due to last minute issues with work or family. When it comes to voting, we should worry about Russian attempts to influence us, but we should also worry about a repeat of 2016 when 100 million eligible voters did not vote because they could not get to the polls. Congressmen, afraid of technology, want to go to all paper rather than fund investments in technology, as we do for NASA, to strengthen our democracy in a way which makes it safe and convenient for American citizens.

"Silicon Valley is having some success in a crusade for voting by phone. Computer security experts are aghast to see election officials signing on." (LA Times / MAY 16, 2019)

Written by Dr. John R. Patrick, President of Attitude LLC | 5/25/19

Estonia is a member of the European Union and the eurozone and is an advanced economy, according to the IMF. Before the Second World War Estonia's economy was based on agriculture, but there was a significant knowledge sector (with Tartu known for scientific contributions) and growing industrial sector, similar to Finland. Products such as butter, milk and cheese were widely known on the western European markets. Main markets were Germany and United Kingdom, and only 3% of all commerce was with the neighbouring USSR. The USSR's forcible annexation of Estonia in 1940 and the ensuing Nazi and Soviet destruction during World War II crippled the Estonian economy. Post-war Sovietization of life continued with the integration of Estonia's economy and industry into the USSR's centrally planned structure. Estonia and Finland had about the same GDP per capita before Estonia became a socialist economy. By 1987, the capitalist Finland's GDP per capita was 14,370 USD and the socialist Estonia's GDP per capita was around 2,000 USD. After Estonia moved away from socialism in the late 1980s and became an independent capitalist economy in 1991, Estonia emerged as a pioneer in the global economy. In 1994, Estonia became one of the first countries in the world to adopt a flat tax, with a uniform rate of 26% regardless of personal income. In January 2005 the personal income tax rate was reduced to 24%. A subsequent reduction to 23% followed in January 2006. In 2007 the tax rate was lowered to 22% and in 2008 to 21%. The rate was frozen in 2009. Estonia received more foreign investment per capita in the second half of the 1990s than any other country in Central and Eastern Europe. Estonia has been fast catching up with the EU-15, having grown GDP per capita from 34.8% of the EU-15 average in 1996 to 65% in 2007, similar to Central Europe. Estonia is already rated a high income country by the World Bank. The Estonian economic miracle has been termed a Baltic Tiger. Estonia is ranked 12th of 162 countries in the Index of Economic Freedom 2008, the best of any former communist country. Estonia is on bottom of Europe by labour market freedom, but the government is drafting improvements. Estonia is 17th on the Ease of Doing Business Index 2011 by World Bank Group. The Government of Estonia finalized the design of Estonian euro coins in late 2004, and adopted the euro as the country's currency on 1 January 2011, later than planned due to continued high inflation. The Estonian kroon was pegged to the Euro at a rate of 1 EUR = 15.64664 EEK. The Financial Crisis of 2008 seriously affected the Estonian economy, primarily as a result of an investment and consumption slump following the bursting of the real estate market bubble which had been building up during 2004. Estonia had the E.U. 's worst year for unemployment. Unemployment in May 2009 rose to 15.6% from 3.9% a year earlier. Nonetheless, Estonia has weathered the crisis relatively well.

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