Esteemed Chairman of the Seimas,

The High Seimas,

In accordance with my constitutional duty, every year in February, I make an annual report about the situation in Lithuania, its domestic and foreign policy. It is a formal attempt to try and survey the life of our state during a calendar year.

It has become a tradition to prepare two variants of the report. The first one, longer and more detailed, has been circulated in the form of a separate book among all the members of the Seimas and the Government. The publication contains many figures a nd other facts about the condition, development and the perspectives of the key spheres of our life.

A speech, however, cannot last for hours. With this in mind, distinguished members of the Seimas, allow me to offer for your attention a much more condensed variant of my report in which I am going to address they key issues as I understand them.

What distinguished the year 1996, the sixth year of our regained independence?

The most remarkable thing about it was that 1996 brought into relief the dominant trend in the development of Lithuania - our drive towards Europe. Our return into the fold of the family of European democracies, economic and security integration, and c onvergence of cultures are progressive developments, born out of striving for good and filled with the promise of tempting perspectives of a better life. It is quite a challenge to travel along that road: we have to be ready to overcome difficulties and t o renounce a provincial and peaceful lifestyle to which weare used. Homecoming to Europe is a tremendous challenge to our economy, politics, and culture; it is also a social test for our people. We have to make our manufactured and intellectual goods comp etitive on the world markets, we have to create a sound social safety network, we also have to protect our culture from mass culture which is alien to our traditions .

Those who try to judge the political situation in Lithuania objectively should admit that last year saw a further decline of political tensions and confrontation, and was marked by a growing tolerance..towards each other and awareness that, irrespectiv e of our ideological differences, political leanings or backgrounds, we all are compatriots sharing the same aspirations and we are able and we should live in accord. All the achievements of Lithuania are the achievements of work, intellect and will of it s citizens. The government contributed to this process through its decisions, taking into account the interests of the State, various political groups and individual persons.

Among the most notable political events of 1996 were two changes of the Cabinet. I had to step in during the first one and to remove the Prime Minister. I have always held a view that a state official holding the post of a senior executive officer shou ld have an impeccable reputation. The second Cabinet change was a natural outcome of the Seimas election held last autumn.

It should be pointed out that the election afforded an excellent opportunity for the parties to appear on the political scene, to declare their programme targets and to try and test their own influence. The final word belonged to the citizens of Lithua nia. Regrettably, a considerable proportion of them expressed their attitude by not taking part in the vote.

In the aftermath of the elections to the Seimas, the balance of political forces has shifted. The Homeland Union - the Conservative Party of Lithuania became the dominant party in the country’s political life.The 5 percent barrier has also been passed by the Christian-Democratic Party, the Centre Union, and the Democratic Labour and the Socialdemocratic Parties which formed opposition parliamentary groups.

The Conservative Party formed a coalition government with the Christian-Democrats and assumed responsibility for running the country. The process of forming the Government showed that our state is being already governed by a democratic Constitution and is building its democratic traditions. For the second time, a fairly smooth transfer of power between two opposite political forces took place.

Political developments of last year, the removal of the head of the Sixth Government in particular, proved how vital it is for absolutely all state authorities to adhere to rights and duties laid down in the Constitution and national laws. Abuse of one ’s powers has never contributed to strengthening of democracy.

The Seimas, President of the Republic and the Cabinet should seek by concerted efforts to enhance the prestige of the government, to try and make the activities of these institutions transparent to the citizens of the country, to be mor e responsive to their suggestions, and to refrain from hollow political verbiage that does not add to the prestige of public institutions. We are all aware that growing political apathy and disappointment with the country’s government may acquire dangerou s proportions, eventually lapsing into indifference to the future of one’s motherland.

Bad social conditions, more than anything else, are responsible for disillusionment prevalent in certain sections of society. The current period of our life is laden with difficulties: encouraging changes taking place in our macroeconom ics have not yet had a concrete impact upon the life of the poorest sections of the population. Now allow me like to take a closer look at our situation. .

The 1996 economic results of Lithuania should dispel the lingering doubts of a sizeable number of those who are sceptical about the prospects of our economy. For one thing, the overall situation in this sphere has shown a marked improvement; besides , the restructuring of our economy in accordance with the principles of the market is nearing completion. This is evidenced, above all, by the growth of the GDP which in 1996 was about 3.5 percent; during the six years of our independence, 1996 saw the lowe st inflation which fell to 13.1 percent. It would not be an exaggeration to say that the hardest times of Lithuania’s economy are already in the past.

For the second year in succession, we are evidencing the growing volume of agricultural production, trade,.telecommunications, transport and other services; private business is gaining ever stronger positions .

Our foreign trade has been expanding, with an annual growth of one-fifth of its total volume . At present Lithuania has economic relations with over 140 countries of the world. The orientation of our industrial firms which still maintain trade relation s with Russia and other CIS countries is gradually shifting to western markets. The current trend is the growing trade volume with the western countries which is over 60 percent. Until recently the proportion was in the opposite direction.

Despite the fact that over the recent years our trade and economic co-operation with the EU countries has expanded markedly, we cannot close our eyes to the fact that it is a difficult task for our businesses to find their way to the markets of Western Europe. Therefore our home and foreign policy has to be oriented towards providing more assistance to businesses. The Government took a very important and timely step in that direction by creating the Export Support Fund. The Government should also prepa re a comprehensive programme to promote businesses in their effort to become competitive on foreign markets.

Lithuania should redouble its efforts in seeking membership in the OECD and the WTO. Full membership in those organisations would give us greater possibilities to attract more investments and to establish economic relations with a larger number of coun tries.

Positive investment trends are the best indicator of the prospects of the country’s economy. Until the end of 1996, over 5,300 enterprises were registered with a total of 400 mn. USD foreign capital. 96 countries of the world have foreign investments i n Lithuania’s economy . The USA, Great Britain and Germany have the largest share of investments.

This is the bright side of our economy. In order to be objective I cannot side-step its weaknesses.

The national and municipal budgets failed to raise about 370 mn. Litas of revenues, which resulted in huge debts to the energy and utilities sectors. 100 mn. Litas has been allocated in the new budget to cover these debts. However, the sum is not adequ ate for this purpose.

It is my view that the major cause of failure to collect the revenue is our inability to crush shadow economy, in particular smuggling, tax evasion and double entry book-keeping.

.

Budget deficit is a heavy burden that all society has to shoulder. Deficit serving expenses run into hundreds of millions of Litas which could be used to finance education, health care, culture, and science. Regrettably I have to admit that this year t he budget deficit is even greater than that of last year. Our immediate target is to try and reduce deficit, while the ultimate goal is a balanced national budget.

We have to improve the situation in our energy sector where the production costs ever since the restablishment of independence have exceeded the rates. Excessive losses in the power network, unreasonable commercial expenses and an overblown management system is a drag on Lithuania’s economy. Yet we should not turn away from the energy sector and leave it to fend for itself, as is the situation at present. It will not cope with the magnitude of problems it is facing. It has run up huge debts by low rate s that have been kept up artificially, no provision has been made for funds to compensate the difference. The newly reoganized Commission for the Control of Prices of Energy Resources and Energy Sector should start functioning as soon as possible.

We delayed too long the setting up of a national oil company. Only at the end of last year the Government was empowered by law to establish a joint stock company "Lietuvos nafta". All the enterprises belonging to the company have a common target - to m ake a more effective use of the production potential. A successful operation of "Lietuvos nafta" would increase considerably the revenue to the national budget. It is my hope that this would serve as an incentive for the Government to go ahead without any further delay with the enforcement of the law on the establishment of "Lietuvos nafta".

The second stage of privatisation - cash privatisation should have already gained momentum. Regrettably we are not witnessing it. It has been blocked by an open boycott of the founding ministries. They put on the privatisation list only small firms , u nattractive for investors. Moreover, only a half of all the projected enterprises were tendered for privatisation in good time. E.g., out of 37 enterprises on the list of the Ministry of Industry and Trade, only 4 were tendered for privatisation. Similar attitudes have been demonstrated by the Ministry of Communications and Informatics and the Ministry of Energy.

More resolute measures have to be taken in this sphere. The Government should assess appropriately the founding ministries and instruct them to draw up together with the Privatisation Agency privatisation programmes of the major energy, transport and c ommunications companies. The Privatisation Agency has to be more active; it is not enough to rewrite the proposals of the founders. It has to have its own opinion and try to enforce it. If it lacks powers to do that we should give them to her.

The memory of the crash of two banks , the Lithuanian Joint Stock Innovation Bank and Litimpeks is still very much alive in our minds. . The crisis was a tremendous blow to the country’s financial market, unleashing a massive deposit withdrawal from al l the commercial banks. During the first three months of 1996, the private deposits went down by 17 percent. The situation was stabilised later on and from August private deposits started returning to banks. Throughout the year, the total sum of deposits increased by 16 percent. Other financial indicators of the banks began to improve; e.g., over the year their assets showed a growth of 24 percent.

According to the equity in their possession, most banks in Lithuania are medium-sized, with an equity of only 20 - 30 mn. Litas. This does not yet come up to the international standards.

Last year the banks stepped up their internal control, by granting greater powers to audit, and put up more stringent requirements for extension of loans. I initiated the loan risks data base. It provided a possibility for other banks t o use the information about the debts of a concrete economic entity, and its outstanding loans. In general, we need a comprehensive programme for prevention of major financial losses and crises and for guaranteeing security of the deposits.

1996 saw a 67 percent increase of the minimum monthly wage, a 27 percent increase of the average basic pension , and an 18 percent increase of the average wage. Those are not impressive figures; however, it is significant that they exce eded the rate of inflation growth and, in general, ev idence a positive trend.

The gravest social concern of the state are its retired people The old-age pensions in the health, culture and education sectors are especially inadequate just because the pay of people in those sectors was low despite the fact that they have a long re cord of work. I have submitted to the Seimas a draft for amending Law on State Social Security Pensions where I suggest that the income quotient should be increased for those persons thus making it possible to increase their pensions. It is a pity that th is draft law has not yet received due attention at the Seimas.

The situation of the disabled people, of other people in need of social assistance , also of young people at the start of their independent life is hard. Young families should be given a possibility to obtain soft credits for housing and should be enti tled to more social assistance at the birth of a child. The declining birth rate each year calls for a special national demographic programme.

One other concern of our social life are homeless children and orphans. At present most of them are brought up in state children’s homes, others are finding home in foster families. Each foster family has from 5 to 30 children. There are 32 such famili es in Lithuania. Children brought up in foster families are better prepared for independent life and social integration. The Government and municipalities should promote and assist the newly formed foster families. We should adopt Law on Children’s Custod y in the immediate future.

Last year 12 laws on health care were adopted, forming the legal basis for the health care system. Yet the number of laws is not a decisive factor guaranteeing the success of the reform; delegated legislation should be enacted in good time too. It is p recisely the lack of it that impeded the application of the provisions of Law on Health Insurance.

On the other hand, the health system reform cannot be delayed because of the need to co-ordinate, improve and amend the seemingly or really inadequate existing lasws. Inadequate laws should be amended, there is no doubt about that. On the other hand, w e need practical efforts on the way to reform which would show in practice what should be improved in the health care system. Health insurance will be effective from July 1, 1997 and should provide the basis for a long-term reform with a more viable healt h care system as its ultimate goal.

Many people are dissatisfied witht the growing prices for medicines: during the first half of 1996 alone they showed a 6.5 percent increase. The population could be provided with cheap and good quality medicines through developing the local pharmaceuti cal industry. The Government should take this into consideration.

There are signs that Lithuania’s culture, science and education are at the end of the thorny road of transition to a democratic society. Last year saw a great number of various cultural events both here in Lithuania and abroad representing our cultural achievements. Concert and theatre halls are attracting larger audiences, our singers, musicians, actors and other performing artists have won important awards and prizes. It is important that every person should be given an opportunity to choose a cultur al event according to his taste. An increasing number of such events are organised not only by the Ministry of Culture but also by various funds and organisations.

At the same time we cannot close our eyes to some negative developments on the cultural scene. Under the guise of trendiness, violence, cruelty and disregard for the norms of morality are being propagated. There are cases of non-compliance with Law on the State Language . In preparation for the one thousand year anniversary of the first mention of Lithuania’s name which will be marked in the year 2009, we should promote the orientation of the state and the public towards the values of national culture.

The growing status of culture, education and science is evidenced by the fact that for two years in succession, the entrance competitions to Lithuania’s institutions of higher learning have been on the increase. Institutions of higher learning, researc h institutes and centres are learning how to adjust themselves to the market conditions and how to raise funds from various sources for the promotion of fundamental and applied research needed to meet the needs of the country.

The year 1996 was imortant for the development of local government. The amendment of Article 119 of the Constitution has established a three-year term of office for local councils. A supplement to Article 47 of the Constitution has granted the right to the local government to acquire non-agricultural land for constructing and operating structures necessary for their activities. In 1996 the European Charter of Local Government was signed.

However, last year did not contribute to the enhancement of economic and financial independence of local government. The key tasks in this sphere for the year 1997 are a revised local government budgeting procedure and a sound management of local gover nment property

The future of Lithuania’s national legal system lies in its harmonisation with the European Union legislation. Our laws should be in accordance with the requirements of EU legislation. In addition, our laws have to respond to the needs of society, they have to protect and safeguard human rights and freedoms, be in conformity with the principles of international law and enjoy stability. Regrettably our laws are revised so often that even officials responsible for their enforcement, let alone ordinary ci tizens, can hardly get their bearings in the multitude of various amendments.

Judicial institutions and law enforcement institutions form another part of legal system. A special place here belongs to courts. Their role is growing in our society. Higher requirements are put to judges, both in terms of their qualifications and the ir integrity. Last year the Seimas adopted my amendments to Law on Courts. Under these amendments, a person with no experience of work in courts, before his appointment as a judge of a district court should have one year of practice in court. It is my hop e that this amendment will improve the qualifications of judges and would improve the quality of their work.

The crime situation in the country has yet not shown any improvement. Crime is on the increase; moreover, it is becoming more organised and professional. The criminals are younger: last year nearly half of all criminal offenders were under the age of t wenty-four. A crime prevention programme for children and young people should be developed and implemented as soon as possible.

The growing violence against children is another concern. The public has been shaken by the cruel treatment of children. Heavier sanctions for violence against children should be imposed. I have already submitted to the Seimas supplements and amendment s to the Criminal Code.

The lion’s share of responsibility for the gravity of this situation rests with the Ministry of the Interior and the Office of the Prosecutor General. The events of last December in Panevėžys revealed the failure of those institutions to provide an ade quate response to the situation and their the unsatisfactory state of their interoperability. Small wonder that the majority of the public have lost confidence in the law enforcement institutions of Lithuania. Only lawful, resolute and effective actions o f the police and the prosecutor’s office can restore that confidence.

One other concern is the situation on the state border. Officers of the Sate Security Department have seized large amounts of smuggled goods, disclosed the system of smuggling and instituted criminal proceedings. It has been established that the bulk o f smuggled goods are brought into the country directly through the customs posts by forgery of documents and bribery of customs officers.

All this makes me be critical about the unsatisfactory work of the customs and the border police. Those institutions have failed so far to eradicate corruption in their own ranks. Technical means of protection of the state border should be introduced w ithout any further delay to make the influence of the officers minimal in controlling the flow of goods, transport and persons.

Unsatisfactory was the work of the departments combating economic crime. Huge sums of revenue never reach the national budget because of tax evasion. Yet not all tax evaders are detected and punished.

In general, it should be pointed out that law enforcement institutions should revamp their strategy and give more attention to the forecasting and projection of criminal processes, to the prevention of criminal offences and try to involve the general p ublic in those efforts. The police should abandon its negative attitude to the citizens and try to serve the public and protect it from the offenders. Such a role is prescribed by the European Police Charter.

The year 1996 saw significant steps in strengthening the national security of our country,

Law on National Defence Service, Law on Military Conscription and Law on Mobilisation and Reserve created a legal basis for a normal functioning of the national defence and all the security system.

The military equipment of the army has improved, especially with anti-tank weaponry. The first artillery units have been formed, a modern surveillance information centre has been set up. Western communications technology is being introduced, transport is undergoing modifications,

In 1996 Lithuania’s Partnership for Peace programme was drawn up and approved; our military took part in 23 joint exercises with their colleagues from NATO and in over a hundred various other operations within the partnership framework. The Lithuanian platoon which served within the Danish battalion in the IFOR in Bosnia has been replaced by a company. The Lithuanian servicemen of the company have been highly commended by the NATO and Danish military command. This is a noble but not an easy mission. Li thuania, however, is determined to continue it and contribute as an active member to the consolidation of security in Europe.

I fully support the plan to increase the allocations for national defence in the 1997 budget. Lithuania’s determination to create an effective defence system is evidenced by Law on Basics of National Security that was adopted last December.

Ever since the re-establishment of Independence, our country’s foreign policy has been marked by continuity, stability and predictability. Foreign policy that was pursued for four years is being continued by the present coalition majority and, in princ iple, coincides with the section of foreign policy of the Government programme. I shall spare no effort to preserve this trend in future and see to it that each supreme body of government discharges its constitutional powers.

Fundamental changes that started in international relations approximately a decade ago are modifying the political structure of the Old Continent, contributing to an ever more profound economic and political integration, respect for lasting democratic values and human rights.

Lithuania as an integral part of Europe takes an active part in world political developments and competition. In various international organisations the vital interests of our country are represented and defended, bilateral relations are being expanded and deepened; we also are active in co-operating in various regional structures.

Defending the country’s interests on the international level will always be of vital importance and it will never be an easy task. World has limited resources, consequently, the vital interests of our country can only be met by a prudent use of those r esources. I mean here not only human and natural resources but also attention of the world to our country, credits, markets for our goods and services and many other things.

In view of the developments of the geopolitical situation in Europe, in its foreign and security policy Lithuania should seek, as it has been doing until now, only positive results. Our shortage of power and resources should be compensated for by our v igorous actions. To achieve this all the bodies of state government should show utmost effort and co-ordination, initiative and responsibility .

Historically and culturally Lithuania is a part of Western civilisation, living by its values and ideals. It sees its future in the family of Western democratic industrial nations. Our diplomatic representatives this year should be not only more active but should seek more support from other countries for our security and integration aspirations. Full membership in the European Union is the chief priority of our foreign policy.

The Europe or Association Agreement has until now been ratified by the European Parliament and eleven EU countries. On Lithuania’s initiative, the Baltic states have sent a joint letter to the EU urging it to speed up ratification of the Europe Agreeme nts between Baltic States and the European Union in the other countries. We should not slacken down our bilateral diplomatic efforts until the Europe Agreement is not ratified in the remaining four countries of the EU.

Lithuania’s attention has been focused mostly on co-operation with the European Union in the sphere of law enforcement, especially in combating illegal migration and organised crime. It is essential for us to try and solve the issue of visa-free entry of Lithuanian citizens into the major Western European countries, to step up talks on the possibility of accession to the Shengen Treaty. I raised these and other problems last December during the Summit of the EU and Associate countries in Dublin.

Lithuania is prepared to start the European Union accession negotiations and supports the idea of setting the negotiation time-table in the coming Amsterdam EU summit in June. We endorse the proposal to start negotiations with all the candidates at the same time. We shall seek to complete the negotiations with the first candidates. We are aware that this is a long process calling for major efforts in reforming all our life and enlisting the understanding and support of our citizens.

I would suggest that the European Integration Co-ordination Council set up a special commission to promote and co-ordinate participation in presenting and explaining the prospects of the development of our state and our foreign policy priorities of not only our government bodies but also of NGOs as well as representatives of business, science, culture and other sectors.

Another major issue of our foreign policy is integration into NATO, in close co-operation with the members of the Alliance, with Poland, other Central European and Baltic states. Lithuania sees its membership in the European Union and Transatlantic sec urity structures as interrelated and complimentary processes that would expand the zone of stability and greater security and welfare into Central Europe. In its drive to become a NATO member, Lithuania does not seek to escalate the present or the foresee able threat. Our aspiration stems from the general rationale of the processes of political Euroatlantic integration

One of the most compelling factors in enhancing Lithuania’s security and a contribution to the security of the region and of Europe on the whole are good relations with our neighbours. Close and diverse relations with Poland could serve as an example. It would not be an overstatement to say that they have never been better throughout our history as they are today. We view our southern neighbour as our strategic partner in the integration into the EU and NATO as well as in strengthening the security and stability in the region.

The nature and effectiveness of our co-operation with Latvia and Estonia, the tactics of the Baltic States on their way to the European and Transatlantic economic, political and security structures have become the subject of debate lately. Without writ ing off our differences, I would like to note that the unity of Lithuania, Latvia and Estonia, the co-operation among our states has to be one of the key priorities in our policy. At the same time, there is no point in confining ourselves to a narrow circ le.

Differences between Lithuania and Latvia on the delimitation of the economic zone in the Baltic Sea are of a local and temporary nature. They should not influence the further development of friendly relations between our countries. I am positive that t alks with our neighbour will continue until we find a fair solution acceptable to both sides.

Lithuania maintains constructive relations with its eastern neighbours. Our relations with Russia have become normal, not clouded with any unsettled political problems. It gives me pleasure to note that the present majority in the Seimas is in favour o f this process. Fully in favour of such an approach I would like to underscore once again that economic relations should be developed in a balanced way and should be in conformity with the EU standards. Lithuania’s import and export geography should also retain its diversity. In its relations with Russia Lithuania will continue to adhere to a definite and consistent position - co-operation based on the principles of good-neighbourly relations, mutual understanding, equality and mutual benefit.

In recent years, especially on the eve of momentous decisions, we are giving more attention to the promotion of bilateral relations with the countries of the European Union and NATO. Our relations with Germany, the United Kingdom and France are expandi ng . The support of those countries is especially important for us; some of decisions in deciding our acceptance to the European and Transatlantic structures depends to a large extent upon their opinion. I often raise these issues not only during my meeti ngs with heads of state of European and North American countries but also with the ambassadors of those countries to Lithuania.

One of the primary targets in Lithuania’s foreign policy is to deepen bilateral co-operation with the USA. Last year during my visit to that country I met with President Clinton, the Defence Secretary and members of the Congress. We discussed developme nt of bilateral relations and the issues of security of the Baltic states. It is my hope that this important dialogue will be continued.

Allow me to emphasise the major role that the USA is playing in ensuring the security of Europe in general and of the Baltic states in particular, in supporting Lithuania’s aspiration to become a member of the North Atlantic Alliance and of the Europea n Union. More focus should be given to our relations with the South Pacific region. Our objective is to seek a more active and constructive support of the countries of that region for our efforts to be integrated in European and Transatlantic structures.< /P>

Development of regional co-operation is one of the priorities of Lithuania’s foreign policy. It should be pointed out that we belong to several regions at once.: the Baltic Sea area, Central Europe and the Baltic states.

Development of relations with Central European countries secures Lithuania’s position as an integral part of Western civilisation. I would like to draw attention to the need to promote political and economic co-operation with the CEFTA countries. Last year we signed free trade agreements with Poland, Czechia, Slovenia and Slovakia; we have also started negotiations with Hungary. This allows us to expand considerably not only the volume of bilateral trade; it also brings us closer to the CEFTA membershi p.

Co-operation between Lithuania and the Nordic countries has good traditions. Each year it is being enriched with new initiatives in political and economic spheres. We are grateful to those countries for their wholehearted support of Lithuania’s aspirat ions. I would like to single out bilateral relations between Lithuania and Denmark , especially our practical co-operation in the military sphere and peace-keeping.

As President of Lithuania, under our Constitution, I am assigned the function of forming our State’s foreign policy and implementing it together with the Cabinet. In my view, NGOs, representatives of business, science and culture could make a more tang ible contribution to our international policy in the broad sense of the word. Interparlamentary relations of our Seimas and its members could help enhance the image of Lithuania as a democratic state in Europe and the world.

.

There are no state subsidised or privately funded research centres in Lithuania yet that would be engaged in analysing international policy. Therefore we feel a shortage of qualified foreign policy analytical studies. The first attempts in this directi on are being made at the Institute of International Relations and Political Science of Vilnius University. But this is just a small fraction in this sphere. I should think that Lithuania also needs an academic periodical on foreign policy issues. The Gove rnment should try and find financials resources for it.

Lithuania’s development after 1990 has shown that a state which succeeds in building its image and knows how to present it to the world gains a great deal. The chances of integration into the world economic and political structures, the size of foreign investments, and the international prestige of our country depends on our international reputation, our economic and political situation. It is important that Lithuania should show itself to the world as a country which has preserved and cherished its na tional traditions, its ancient language and a unique culture. Image building is a strategic objective of Lithuania’s policy.

Our present image in the world is not wholly satisfactory. Frequent amendments of our laws and decisions, crime, border crossing problems, the work of customs and tax inspectorate, a negative attitude to foreign investors are detracting from our image. There is too little information about Lithuania in foreign languages and the one that is available is not quite adequate. The image of the country is also harmed by irresponsible and reckless statements by some of our politicians.

Lithuania’s participation in the European integration processes opens up wide possibilities for the renewal of our country’s political and economic life, for a successful development of our state. The success of these developments will depend on how pu rposefully and precisely we shall implement the EU accession policy, how successfully we shall be able to solve issues related to the new position of our country on the international scene. In my opinion, at present we are enjoying a sufficient amount of attention of the world; the only thing that is lacking is a more conceptualised and objective image of Lithuania to the international community. Lithuania should be viewed in the world as a sovereign state with a number of apparent advantages.These are - a convenient geographical situation, scenic beauty, ancient architecture of its cities, unique culture and ancient language, good transport, a high intellectual potential of Lithuanian enterprises, and a qualified workforce.

It is not by chance that I decided to conclude my annual report on the note of Lithuania’s image. It is here that all the problems of our life, all our achievements converge most vividly. It is my greatest wish to see Lithaunia’s image in future co incide with the vision of our state that we cherish, the image that would embrace all our greatest aspirations and ideals. We, on our part, with a systemic and comprehensive vision of a modern state in place, shall be better equipped to shape our domestic and foreign policy, our economic and social development, to solve the problems of state administration, security, law enforcement, and technological progress.

Thank you.