What if you could opt-in to another country’s laws without having to actually go anywhere? Welcome to the world of e-residency
IF YOU live in the UK or US, your sense of national allegiance may have faltered this year. Brexit and the election of Donald Trump have left many people feeling their country is increasingly unrecognisable. Emigration isn’t an easy way out, though. What if you could opt in to the laws of another country without moving there?
Thanks to Estonia’s e-residency scheme, you can – and the basic idea is one that’s set to grow. Next year, you will be able to file for digital citizenship of Lithuania, and other states are planning similar schemes. One day, perhaps, it will extend to groups other than countries. So what happens when we all up sticks to the internet?
E-residency is not true citizenship. You won’t be able to vote or live in Estonia, and won’t have to pay its taxes. Instead, think of it as the right to reside in the Estonian cloud, in exchange for €100 and a few identity checks.
What does that get you? For one thing, unfettered access to the European Union single market, something many UK citizens may want post-Brexit. It is already helping Stanislav Yurin. Based in Ukraine – outside the EU – Yurin uses his e-residency to help him sell paintings internationally. “Ukraine is facing a pretty turbulent economic situation,” he says: Paypal is blocked, and local payment systems are hamstrung by cumbersome regulations and taxes, he says. “They’re hard to use for small businesses.”
“More and more people are becoming global citizens,” says Tavi Kotka, who oversees information security for the Estonian government. “We want to make it easier for them.” To that end, the country recently changed its laws to let its e-residents open online-only bank accounts. In the next couple of years it will extend e-residents’ ability to conduct business using Estonian cloud services. Already over 1000 new companies have been established by e-residents.
Estonia doesn’t deduct taxes from e-residents, so Yurin need only pay taxes in Ukraine. But e-residency is not a tax haven – in fact, Estonia bills it as the reverse. The country already combs through all its citizens’ digital accounts to automatically work out their taxes, and Kaspar Korjus, who directs the e-residency programme, says it will one day provide the same service to its e-residents’ home countries.
So what’s in it for Estonia? The country’s banks and other businesses will offer e-residents a range of paid services, the income from which will allow Estonia to, as one commentary put it, “protect our language, culture and nature, and to pay Estonian citizens by birth decent wages and pensions”.
Estonia has been offering e-residency since 2014 (see map), and other countries are starting to see the potential. This month Lithuania is set to pass an e-residency law, says Julius Pagojus, the country’s vice minister of justice, with registrations to begin in mid-2017.
Lithuania’s move is motivated by its diaspora. Some are former citizens, having taken up a new nationality (Lithuanian’s laws do not allow its citizens to hold more than one passport). The potential effect of Brexit on these people meant the government wanted to offer them a version of citizenship without changing existing laws.
“Our citizens now do not have Lithuanian citizenship but maybe have businesses, real estate or relatives here,” says Pagodus. “We want to use this to help them keep closer ties to their homeland,” he says, although the scheme will be open to anyone.
Lithuanian e-residents will be able to use any service provided by the state or private sector, and will have access to the EU market. Korjus says he has also been asked by the governments of Finland, Dubai and Singapore to consult for them on setting up their own versions of e-residency. “We won’t be unique for long,” says Kotka.
Since each e-residency will offer its own benefits, each scheme will be competing with the rest to win members. Estonian entrepreneur Kaidi Rusalepp predicts her life will split in two within 10 years. She will have a physical life where she pays taxes to maintain roads and run local medical services, but her children might study virtually in Azerbaijan, “so some of my taxes will go there to pay for education”, she says.
It needn’t stop there, as there’s no reason for e-residency to be something that only countries can offer. “There are two ways of understanding the concept of a nation,” says Korjus. “The ground you’re standing on, or the shared ideologies that bind a group of people.”
Eric Weinstein, who manages Silicon Valley investment firm Thiel Capital, puts it another way. “Some people are ‘hardware’ nationalists – you need to share genetics, you were born on the same soil. But then there are ‘software’ nationalists: they don’t care where someone was born, but it’s important to them to share the cultural programme that makes up their identity.”
Could “software nationalists” bootstrap their own nation? Thiel Capital’s founder, Peter Thiel, has already argued that people might decamp to the sea, space or cyberspace to escape political overreach. What if Silicon Valley created an e-residency scheme of its own? “You don’t have to have land to exercise de facto sovereignty,” says Lorraine Weekes at Stanford University in California, who is researching the Estonian programme.
Non-territorial nations, she says, might be able to begin exercising control over things until now monopolised by nation states. But can the concept go even further? Could national identities, ported into cyberspace, begin to change our ideas of what is necessary to found a nation state (see “What is a country?”, below)?
Korjus is especially excited by this prospect. “People will choose their citizenship, residency and e-residency according to values. In many transactions, physical space is becoming less important.” To some extent, the divergence between real and virtual populations is already taking place – Estonia’s e-residents are 88 per cent male, for example.
So how far can this separation go? Can you have a purely digital existence, or are some ties to the physical world impossible to cut? In theory, cyberspace has infinite room for all, but Weinstein thinks that conflicts will emerge soon enough. “What does it mean to be an e-Estonian versus an e-Lithuanian? If those two countries go to war, what will happen to e-commerce between those countries?” We don’t know yet, he says. “But we should definitely start looking at these problems.”
William Worster at The Hague University of Applied Sciences in the Netherlands takes a more sceptical view. Some entities, like the offshore outpost Sealand, have claimed to be countries in their own right, but “none have resulted in bringing about a new state in any way”, he says. “Most of them are destined for failure or to linger on as eccentric hobbies.”
Worster doesn’t buy the idea that citizenship can be separated from states. Instead, he thinks states will remain the world’s main political entities by evolving and reinventing themselves – just as Estonia is doing with its e-residency scheme.
In the meantime, e-residency’s star is on the rise. Since the Brexit vote in June, the number of new e-Estonians from the UK has tripled from an average of 22 per month to 70. The digital exodus has begun.
E-residency could lead to the creation of digital-only countries – but what exactly is a country? According to international law, a country is a synonym for a “state” – in the sense of an independent, political entity with a permanent population, a defined territory, a government, and the capacity to enter into relations with other states. There are also “states” that aren’t countries, like Texas.
A nation, by contrast, refers to people who share many markers of identity, but do not have any official sovereignty. One example is the Kurds, who are a distinct ethnic group bound by language and culture, but live under the rule of countries including Turkey, Syria, Iraq and Iran. Increasingly, more groups want their own states, from Scottish nationalists all the way to ISIS.
A nation state marries both of these notions to create a political entity. This is probably what you think of when you see the word “country”: it is the planet’s premier political institution.
E-residency (see main story) could create an alternative. It all hinges on whether state-like sovereignty can ever credibly apply to digital-only entities. To some extent, tech giants like Google and Facebook are already effectively sovereign over their users. It remains to be seen if a virtual sovereign can ever take on a real-world state.