USAID Quietly Unveils Plans to Export Ukraine’s Digital Governance Model Around World

USAID Quietly Unveils Plans to Export Ukraine’s Digital Governance Model Around World 1

Ukraine’s wholesale digitization of government services predates the war, but in the eternal spirit of never letting a good crisis go to waste and with the financial support of USAID and the EU, it has been significantly expanded since.

One of the more interesting stories to seep out of Davos’ “hive of scum and villainy” (h/t Han Solo) last week was an announcement by Samantha Power, the administrator of Washington’s soft power arm, USAID, that Washington is hoping to replicate the “success” of Ukraine’s e-governance app, Diia, in other countries around the world. Despite its newsworthiness, the story was barely reported in the mainstream or financial media. In fact, the only coverage I could find was an article by Axios, whose author interviewed Power on the sidelines of the WEF’s annual shindig.

But first a promotional video flagged on Twitter by the British campaign group Stop Common Pass.

More from Axios: 

[Samantha] Power views this as part of a broader effort to help democratic reformers around the world deliver for their people, and says countries would be selected accordingly.

“We want to look at the bright spots, at the countries that are committed to transparency and an anti-corruption agenda, that are bucking the global trends,” Power said. She noted that Moldova’s reformist government has already expressed interest in Ukraine’s e-governance approach.

Power also hopes to partner with countries in the global south. Given the current “economic headwinds,” even leaders who are working to clean up corruption and improve governance may struggle to improve the lives of their citizens, she said. An app that allows citizens to file taxes or access birth certificates without waiting in line for hours could be one tangible improvement, she argued.

Kiev already signed a digital trade agreement, or DTA (yes, they do exist), with the UK government in December. That agreement includes a commitment to collaborate on digital identity, as I reported in “Against Backdrop of War, Rolling Blackouts and Internet Outages, Ukraine Is Trying to Digitize Everything“. Now, Ukraine is “willing to share” the approach and technology it has developed for e-governance with other countries. And it will be supported in this endeavor by the United States Agency for International Development (USAID).

One country that is currently working to replicate Ukraine’s digital ID system is Estonia, which is already one of the world’s most digitized countries. As Estonia’s Prime Minister Kaja Kallas noted, the move represents a “new chapter” in the two countries’ digital cooperation.

One question nobody seems to want to ask is just how well Ukraine’s experiment with digital governance is going  logistics of running an increasingly digitized society, government and economy in a country with a decimated electrical infrastructure?

A US-EU Funded Initiative

Ukraine’s digitization of government services predates the conflict with Russia, but in the eternal spirit of never letting a good crisis go to waste it has been significantly expanded since the hostilities began. Just as the combat theaters of Iraq and Afghanistan served as testing grounds for the mass harvesting and storage of sensitive biometric data, some of which fell into the hands of the Taliban when the US left Afghanistan, war-torn Ukraine is being used to pilot the rapid construction of an all-encompassing digital governance system.

Despite the fact Ukraine’s electrical grid has been decimated by surgical Russian attacks, resulting in increasingly widespread power outages, its central bank is also chomping at the bit to launch its own digital currency, the so-called e-hyrvnia. At Davos last week, Ukraine’s Ministry of Digital Transformation Mykhailo Fedorov (who is also Deputy Prime Minister as well as a graduate of the World Economic Forum’s Young Global Leaders’ program) volunteered to be its first user.

“Two weeks ago, I saw a pilot of the electronic e-hyrvnia in Ukraine,” he said of plans to issue a CBDC in conjuction with San Francisco-based crypto non-profit the Stellar Development Foundation. “I plan on becoming the first test user of the electronic hryvnia and I plan to receive on receiving my salary in e-hryvnia.”

First launched in February 2020 by the Ministry of Digital Transformation, which itself was created in late 2019, the Diia platform is used to grant the public access to most government services  online. In total, it has nine digital credentials: the ID card, the identity provider (IDP) certificate for network access, birth certificate, passport, driving license, tax number, student card, and vehicle registration certificate..

The platform is partly funded by the European Union’s eu4digital initiative, which in its own words “aims to extend the benefits of the European Union’s Digital Single Market to the Eastern Partner States, channelling EU support to develop the potential of the digital economy and society, in order to bring economic growth, generate more jobs, improve people’s lives and businesses.” The EU is also working around the clock to get its own digital identity system, the so-called “eID”, up and running by 2024.

Ukraine’s Ministry of Digital Transformation also received seed funding from USAID, to help it launch Diia and bolster its cybersecurity. Then, after the war began, the ministry received a further injection of funds ($8.5 million), to help it expand the app’s services. Now, USAID is pouring an extra $650,000 into Diia, which is admittedly chicken feed. But the initiative will almost certainly be receiving funds from other sources.

USAID’s apparent goal is to export Ukraine’s digital governance model to other countries, in Europe as well as the global south. To kick start the process, USAID’s Administrator Samantha Power and Ukraine’s Minister of Digital Transformation  met in Davos to discuss the idea with a handful of countries and potential private sector partners who could help scale it.

“State in a Smartphone”

The ultimate goal behind Diia — which means “action” in Ukrainian and is short for derzhava i ia – “the state and I” — is to digitize and automate all government services as part of President Volodymyr Zelenskyy’s “State in a Smartphone” concept.

“For citizens, the government should be just a service – simple, but more notably comprehensible,” Mr. Zelenskyy said at the beginning of the Diia presentation in early 2020. “In general, our goal is to make sure that all relations with the state can be carried out with the help of a regular smartphone and the Internet. In particular, voting. This is our dream, and we will make it real during presidential, parliamentary or local elections. It is a challenge. Ambitious yet achievable.”

And exceptionally dangerous, especially in a country with such a fragile, dysfunctional and corruption-plagued system of governance. As a group of Ukrainian cybersecurity analysts have warned, allowing the Diia app to be used for voting purposes is a disaster waiting to happen. The analysts cite an open letter sent by the American Association of the Advancement of Science to US governors, secretaries of state and electoral boards in April 2020 urging them “to refrain from allowing the use of any internet voting system.”

Signed by US research organizations, academics and globally renowned experts, including Bruce Schneier, a public-interest technologist, Martin Hellman, a cryptologist and mathematician at Stanford, the letter states that at this juncture, “internet voting is not a secure solution for voting in the United States, nor will it be in the foreseeable future. Vote manipulation that could be undetected and numerous security vulnerabilities including potential denial of service attacks, malware intrusions, and mass privacy violations, remain possible in internet voting.”

As the Ukrainian analysts note, only one country in the collective West has actually gone so far as to conduct national elections on-line — Estonia — and that was after 20 years of carefully developing the voting model, under the watchful eye of civil society, political parties and EU representatives:

Along the way, many critical vulnerabilities have been detected in the on-line voting system, and the best experts improve it constantly. It works because the Estonian citizens have impossibly high trust in their Government, and its methodology basis is in stark contrast with that of Diia.

The analysts flag up a whole host of other issues with the Diia app, including major defects with the app architecture; its potential for use in frauds and scams; the lack of an account disabling option; its exclusionary effects (some citizens cannot afford or do not know how to use the Diia app); its vulnerability to hacks and cyber attacks; its dependence on an Internet connection and, of course, a functioning electricity grid (currently not the case in Ukraine, or for the foreseeable future); and the lack of transparency and accountability of the organizations running the app. The app also creates an excessively centralized form of governance as well as an unnatural monopoly.

The Perfect Template

The Zelenskyy government’s goal is to create a digital ID system that within three years would make Ukraine the most “convenient” State in the world by operating like a digital service provider, as Fedorov told participants of the 2021 edition of the WEF’s Young Global Leaders program, of which he is an alum. “We are shaping a vision of a post-war Government,” he said. And in that vision, government will be digitized, privatized, automated and outsourced:

The Government needs to become as flexible and mobile as an IT company, to automate all functions and services, significantly change the structure, reduce 60% of officials, introduce large-scale privatization and outsourcing of government functions. Even in the customs. Only such a Government will be able to bring about quick and bold reforms to rebuild the country and ensure rapid development.

That rapid development will apparently be achieved through a raft of public-private partnerships, for which the World Economic Forum is the world’s leading matchmaker. Just this week, Zelenskyy heaped thanks and praise on US corporations, including Goldman Sachs, BlackRock, JP Morgan, Westinghouse and Starlink, for investing in Ukraine, where “we are,” he said, “defending freedom and property.” At the same time, his government is flogging the country’s most valuable property to foreign companies and investors, mainly from the US and Europe, for cents on the dollar.

The speech represented an unabashed fetishization of weapons, war and Wall Street. Bearing the title, “After the End of the War, American Business Can Become a Locomotive of Global Economic Growth,” it included the following two paragraphs:

We have already managed to attract attention and have cooperation with such giants of the international financial and investment world as Black Rock, J.P. Morgan and Goldman Sachs. Such American brands as Starlink or Westinghouse have already become part of our, Ukrainian, way. Your brilliant defense systems – such as HIMARS or Bradleys – are already uniting our history of freedom with your enterprises. We are waiting for Patriots. We are looking closely at Abrams…

And everyone can become a big business by working with Ukraine. In all sectors – from weapons and defense to construction, from communications to agriculture, from transport to IT, from banks to medicine.

In other words, another 21st century smash-‘n’-grab Marshall Plan is in the offing. Through the arming and eventual “reconstruction” (ha!) of Ukraine, untold billions of dollars, euros and pounds will, to paraphrase Julian Assange, be “washed out” of the tax bases of the United States, Europe and the UK and back into the hands of the transnational security elite.

Lest we forget (as most policy- and opinion-makers in the West seem to have conveniently done), Ukraine was openly talked about as one of the most corrupt countries in Europe before the outbreak of war. In Transparency International’s 2021 Corruption Perceptions Index, Ukraine ranked as the second most corrupt in Europe, after Russia. In September 2021, just five months before hostilities commenced, the EU’s Court of Auditors concluded that grand corruption and state capture was still widespread in Ukraine, despite all the billions of aid ploughed into the country:

Grand corruption and state capture are endemic in Ukraine; as well as hindering competition and growth, they also harm the democratic process. Tens of billions of euros are lost annually as a result of corruption.

Zelenskyy himself was caught hiding large chunks of his own wealth in offshore accounts in the Pandora Papers scandal.

Of course, the endemic corruption hasn’t gone away. In this past week alone, five regional governors, four deputy ministers, two heads of a government agency, the deputy head of the presidential administration and the deputy attorney general resigned (or were fired, depending on which source you read) following allegations of rampant bribery and misappropriations of public funds. Perhaps most damning of all, officials at the Ministry of Defense are accused of buying food for the troops at massively inflated prices and then pocketing the difference.

Despite all of this, Zelenskyy’s government is receiving more money in military aid than ever before. At the same time, its deeply flawed system of digital governance is being brandied about by USAID as a template model for other governments to follow. As even the article in Axios notes, exporting the Diia app around the world raises potential security and privacy concerns:

It’s not hard to envision a government using such an app to track a citizen’s movements and activities, or manipulating the provision of government services via the app for political gain.

There are, of course, plenty of other concerns, including data protection, system fragility and the myriad threats digital identity, surveillance and payments systems poses to basic human rights and freedoms. Last June, NYU School of Law’s Center for Human Rights and Global Justice (CHRGJ) warned that investing in digital identity systems risks “paving a digital road to hell”.

In her interview with Axios, Samantha Power batted away these concerns. While conceding that some of the issues have not been thought through yet and emphasising the need to approach the project with “eyes open on the risks inherent in technology and governance,” she believes that replicating the Diia model will be a net overall benefit for services, economic growth and government transparency around the world. In other words, full steam ahead!

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