Mr. Chairman,

The High Seimas,

Lithuania's development has been the leitmotif of all my annual addresses to the Seimas during my term in office as President of the Republic of Lithuania. I witnessed myself and strove to make others notice the advances made by our country - the growing productivity and competitiveness of Lithuania's economy based on the principles of free market, slowly but steadily improving living standards, the gradual growth of personal income, the level of consumption and qualitative changes of its structure. The most eloquent proof of the present state our country and its future prospects is the growing number of applicants to our universities and academies. Young people have confidence in the potential of their country and their own future within it. This is only a handful of facts from the rich diversity of Lithuania's life.

Today, in discharge of my constitutional duty, I am going to present to you an annual report in which I seek to survey the development of our nation and society in 1997. Traditionally, the report is prepared in two versions. The first, longer one, circulated among the members of the Seimas and the Government in the form of a separate book, is broader in scope and has more statistical data. The second, shorter version I am addressing to you.

Last October we marked the fifth anniversary of the Constitution of the Republic of Lithuania which served as the basis for developing our new government institutions, for carrying out the reforms and strengthening the guarantees for human rights and freedoms. During those five years we all, the citizens and the authorities, were learning how to respect our Constitution, how to liberate our thoughts and to master the ways of a new life. It was the Constitution that enabled us to reach an understanding between the government and the citizens, between people of different views.

Each state institution must adhere to the precepts enshrined in the Constitution. No one is allowed to infringe on the fundamental principles of democracy. A harmonious work of all the departments of the State is of utmost importance. With this aim in view, I held frequent discussions with members of the Cabinet, listened to the reports of the ministers, initiated discussion of the most urgent issues and consideration of draft laws at the Seimas. I am pleased to note that I succeeded in averting sharp conflicts with the Seimas and the Cabinet.

Since I was fated to try and develop contemporary traditions of presidency in Lithuania I strove to adhere to the constitutional powers and duties prescribed to me. I acted not only as a representative of Lithuania and dealt with the key issues of foreign policy but I also felt that it was my moral duty to assume responsibility for what was happening in Lithuania and for how well the State was taking care of its citizens. Now that my term in office is coming to an end, I would like to underscore that my major task has always been to seek conciliation, agreement and accord between people of different interests and views.

I took every occasion to encourage people to take a more active part in running the state. The greater the number of the electorate coming to the polls, the better is the chance of having a government that would try to serve their interests. I am glad to note there was a remarkable turn out during the last presidential election. Under the Constitution, the President does not take part in the activities of political parties, therefore the contenders during the presidential election are not political parties but individuals and their views of how to run the state. During the run-off presidential election there were two near equal non-party candidates: it was merely over ten thousand votes that tipped the scales for the winner . What really matters now is that the supporters of both contenders should work in harmony for the good of Lithuania.

In 1997, for the third time after the re-establishment of Lithuania's independence, elections to local councils were held. A new, more efficient Law on the Methodology of Determination of Municipal Budgetary Revenue was passed. All necessary work in preparation for the ratification of the European Charter of the Local Government has been completed. Despite these achievements, some tendencies in this area cause concern. Lithuanian citizens are increasingly passive during the elections of local councils, indifferent to community problems. Most municipalities experience tensions in financing expenditures because of their failure to collect the targeted tax revenue. Another problem is our inability to stop taking into account political loyalties when employing B level public servants. I would suggest we give more focus to that particular problem of our public life: let us try and improve the system of our elections and of municipality finance, enhance the role of the Association of Municipalities and let us encourage the growth and development of local communities.

Not only the people of Lithuania but also foreigners, for example, representatives of the International Monetary Fund, the World Bank and other international financial organisations, cannot fail to notice that our country is implementing economic reforms and has made notable advances in this sphere. Our macroeconomic indicators are better than in some Central European countries. In 1997, the growth rate of the GDP was 6% (according to the preliminary estimates), and the rate of inflation was 8.4%. At present about 70 % of the GDP is made in the private sector where more than two-thirds of the work force are employed.

I shall try to be brief and will survey only some of the branches of our economy. According to the preliminary data, though the year 1997 was not easy for the extracting and processing industries, there was an improvement on 1996. The normal functioning of many industrial enterprises was impeded by imperfect legislation, outstanding debts and other causes. Over 40% of all enterprises were unprofitable. The efforts of the Government to improve the economic conditions of industry have not yet reached the expected results. We are aware that it takes some time for changes in economic policy to materialise. We have to devise, without any further delay, a strategy for the development of industry, to look for ways how to increase the demand for our industrial goods on the domestic and foreign markets, to assist the industrial enterprises with their financial problems, to amend the outdated provisions of our legislation.

Last year was relatively good for our agriculture. According to the preliminary estimates, its volume grew by 6%. There are positive trends in the exports of agricultural products.

The reduction of electricity export (by 25%) resulted in the decrease of electricity production by 13 %. This caused an overall deterioration of the energy sector. The Government had to resort to resolute measures: Regulations were enacted on the recognition and repayment of the state debt to the public company "Lietuvos Energija". Because of this, in the 1998 budget subsidies for energy suppliers were phased out. . Important developments occurred in the restructuring of the energy sector. The first important step in this direction was the transfer of district heating and its management into municipal ownership. It is vital now to help the municipalities run this sector effectively.

The energy sector should make a more effective use of its potential. This could be best achieved through growing exports, finding new permanent markets for our energy in Central and Western Europe and integrating our transmission network into the networks of those countries. The Ministry of Economy was right in its determination to export electricity without any intermediaries but before taking the decision to stop electricity exports it should have found direct buyers. Such an ill-considered step has caused losses running into tens of millions of Litas.

This year should see the adoption and approval by the Seimas of the National Energy Strategy. A time has come to adopt important decisions, especially concerning the safety of the Ignalina Nuclear Plant and its future.

The 1997 plan for the State budget revenue was not only fulfilled but showed a surplus of 45 million Litas. No less remarkable is the fact that last year saw for the first time a successful implementation of the municipal budget revenue. It is a proof that the Government's policy aimed at fiscal discipline has been justified. However, we still have a long way to go before we have a perfect idyll. Our aim is to roll up our sleeves and to try and reach a balanced budget or a non-deficit budget because life on credit is an expensive thing. We do not have to look far for examples illustrating this point - nearly one-tenth of this year's budget expenditure has been set aside for servicing the national debt.

According to the figures of the Statistics Department, tangible investments from all sources of financing increased by 10% It must be admitted, however, that shortage of cumulative capital investments, credit sources and a limited potential of the national budget prevents us from providing adequate financing for the priority branches of our economy, for the upgrading and upkeep of the deteriorated capital funds of the social sector. Other financing sources have to be found. One of them are direct foreign investments. By the beginning of this year there were 6000 enterprises in Lithuania with foreign capital investment. The share of foreign capital in the authorised capital of those companies is over 60%. Judging by the provisional estimates, by October 1, 1997, direct foreign investment in Lithuania made up 3,900 million Litas.

The interest of foreign investors in our country is growing. Lithuania is known on the world financial markets. It was favourably rated by the major world rating agencies. The cost of borrowing, accordingly, has decreased. The first issue of Eurobonds has been offered for sale by Lithuania. We are hopeful that 1998 will see more investments.

Since the start of the second stage of privatisation, i.e. since the middle of the year 1996 up till now, 317 objects have been privatised for 84.2 million Litas - 7 percent of state property planned for sale by the beginning of this year. Yes, privatisation is going ahead at a slow pace. The founders who have entered their objects in the list for privatisation make delay in submitting to the Privatisation Agency the necessary documentation and draft privatisation programmes, set unrealistic privatisation conditions.

1997 saw many positive developments in the banking sector; the household deposits insurance system became effective, guaranteeing compensation in the event of the bank's bankruptcy ; exclusive guarantees for household deposits at the banks where the state has over a half of the capital have been cancelled, thus creating equal competition opportunities for all banks. In compliance with the requirements of the EU Member States, amendments to the Law on the Insurance of Deposits of Individuals were adopted providing for insurance of deposits not only in national but also in foreign currency and extending the base of the insured deposits.

In 1997 the banking sector gained ground, the assets of the banks went up by one-third, the household deposits showed a faster growth and the concentration of assets and capital was on the increase.

The development of economy had a positive effect upon the improvement of living standards. This is evidenced by the growing income and spending per one family member and the decreasing share of spending for foodstuffs. A comparison of a household budget of 9 months of 1996 and 1997 is quite illustrative. In 1996 the average household spending for consumables per one family member was 348 Litas, while in 1997 - 372 Litas; the share of food stuffs was 56 and 53 percent respectively.

Our countryside is an area that should be given more focus than anything else. The countryside is lagging behind socially. The income per head in the countryside is 30 percent lower than in cities, and this gap is growing. The life expectancy of the rural population is shorter: there are 60% of people of the working age among the urban population and only 51% among the rural population. Every fourth rural resident is a retired person. Pensions for rural people are considerably lower in comparison with those for the urban dwellers. We have not yet solved the problem of social insurance for farmers. I would suggest that the Seimas and the Government put social problems of our countryside high on their agenda.

I cannot refrain from making a few remarks about last year's salaries policy of the Government. Salaries of the staff at judicial and law enforcement, tax administration institutions and customs have been increased considerably. They bear no comparison with the salaries of either teachers, doctors or university lecturers. Nor can they collate with the average pay of the employees in budget-funded institutions which by the end of last year made up 978 Litas. For the first time the average salary of the employees of government institutions exceeded the pay of people working in the banking and energy sectors and have become the highest in the country - over 2,300 Litas.

In 1997, Law on the Principles of Salaries of Senior State and Government Executives, Members of the Seimas and of the Employees of Local Government Institutions and Organisations had to become effective The Law sought to eliminate differentiation of salaries for the same work in different state departments, to introduce appropriate regulations linking the salaries of a teacher, a doctor and a minister. Such a system was in effect in pre-war Lithuania, it is also effective in developed European countries. Regrettably, the entry into force of this Law is being unduly delayed .

The average monthly wages at the end of 1997 was 985 Litas. During a year, the minimum monthly pay grew by on-third - from 300 to 400 Litas and makes up 44 % of the average monthly pay. The average old-age pension is too small in comparison with the average pay. By the end of 1997, the old-age pension was 266 Litas. Pensioners' life is far from easy and efforts should be made to improve the system of pensions. Private pension funds should be introduced as soon as possible and state assistance should be planned for the pensioners.

As early as 1996 I submitted to the Seimas a proposal to amend Law on State Social Security Pensions providing for an increase of pensions paid to people with long work records but with low pay rates. Regrettably, the draft amendment was turned down by both the previous and the present Seimas and is gathering dust in the drawer.

Since the end of 1993, when the Seimas approved the Guidelines for the Reform of the Legal System, the national legal system has been developing consistently. A great deal of work has been done during the four years of the reform; a number of new laws have been passed implementing constitutional norms and bringing the legal framework in line with democratic values. The system of courts, the prosecutor's office and other institutions have been reorganised. The development of our legal framework was greatly influenced by ratification in 1995 of the European Convention on Human Rights. However, during the years of the reform a number of negative tendencies have surfaced.

At present, the majority of newly enacted laws are laws on amendment of earlier laws. Life calls for revisions of older legislation which no longer keeps pace with changing life. Yet on a number of occasions the present Seimas openly demonstrated its negative attitude to the legislation enacted by the previous Seimas. This in no way contributes to a better quality of our laws, nor does it help our society to abandon its nihilistic attitudes to our laws.

In my estimation, it is a serious shortcoming that the Seimas has not yet received Codes of Criminal and Civil Procedure, the Labour and Family Codes despite the fact that special work groups have been formed to draft these Codes. The discussion of the Criminal and Civil Codes has also been delayed.

The tax administration system is beset by a regulatory disarray. The citizens of Lithuania pay 18 types of taxes, and the laws regulating them are being constantly amended. Financiers, lawyers and tax payers get sometimes lost in the jungle of tax legislation. Its codification is really a matter of greatest urgency.

More attention should be given to harmonisation of our laws and other legal acts with European Union law.

Courts are playing an increasingly vital role in the life of our nation and society. Ever since 1996 pre-trial detention as a preventive measure has been the prerogative of judges. Judges also have been granted wider powers in pre-trial investigation. Mortgage agencies are soon to start functioning at district courts and the institution of mortgage judges will emerge.

The Constitution provides for independence of judges. This is inseparably linked with their professional and civic responsibility. Independence is not a privilege but one of the most important guarantees of the work of courts and judges. It is the judge who should bear responsibility for the impartiality and fairness of court judgements.

Most complaints directed at the courts are caused by unnecessary delays in judicial investigation, especially if this is related to the subjective factors: negligence, professional incompetence of judges or even their direct interest in the negative sense of this word. Such unmotivated delays in judicial investigation should meet with the censure of the Ministry of Justice,. the Judges' Council and the Judges' Court of Honour.

Of late, the work of the prosecutor's office has received more prominence; criminal prosecution is becoming more efficient, more criminal suits reach courts. Financial and other complicated cases are investigated with greater efficiency; more efforts are directed towards solving instances of corruption. The prosecutor's office, however, does not fully meet the challenges posed by the growing crime rate which calls for greater efficiency in discharging the prosecutorial functions.

At the end of 1997, the Government approved the Guidelines of the Police Reform which will be a further spur for a belated restructuring of this institution. The changes will make the Lithuanian police more compatible with the parallel structures in other European countries, will give it more autonomy, independent budgeting and enhanced responsibility not only to the Ministry of Interior but also to local authorities and the citizens.

1997 saw entry into force of several laws very badly needed for crime prevention. It was Law on the Prevention of Organised Crime and Law on the Prevention of Money Laundering. Together with other statutory acts these laws will give greater powers to law enforcement and other institutions in con trolling crime. Law on the Prevention of Crimes and Offences should be drafted and passed without any further delay.

It is totally unacceptable that some of the investigative and judicial officers during the investigation of crimes violate human rights, resort to unlawful investigative methods and abuses. Justice should be dispensed by lawful means. The officers who commit such violations should be punished

There is room for improvement in the criminal procedure itself.: the period of time between the crime and the punishment is too long and costly. Some of the preventive measures connected with deprivation of liberty lead to violations of human rights. The most extreme preventive measures, such as detention should be applied very carefully; each detention should be fully justified and reasoned in each individual case. It is obvious that the choice of preventive measures is the prerogative of the investigating officer, the prosecutor and the judge but deprivation of liberty must be motivated; no one can be punished without a reasoned court judgement.

Law on the Compensation for Damage Caused by Unlawful Actions of Inquiry, Investigation the Prosecutor's Office and the Court passed in 1997 gives greater focus to preventive measures. Citizens who have sustained damage because of the unlawful actions of the inquiry, investigation officers, the prosecutor's office and the court shall be entitled to compensation from 1998. It is my hope that this new law will serve as a reminder to the law enforcement officers to apply procedural measures violating human rights and freedoms with greater care, to seek more acceptable and fully lawful ways in establishing the truth in every case.

More severe penalties are thought to be effective in combating crime. However , the experience of various countries has shown that such an approach is not a way out. Such measures as detention, prosecution, sentencing and isolation of the criminals has a minimal effect. Crime control policy in many countries is being increasingly oriented towards a social and economic crime prevention and efforts are made to try and integrate a former criminal into the life of community. Whereas criminal penalties, especially deprivation of liberty, seek not to correct an offender but to isolate and intimidate him. The conditions of serving sentences do not meet the international requirements; the sentenced persons are not provided opportunities to engage in work, to get a profession, and serving a sentence has only a negative effect upon the person . Ways should be sought to find other alternatives for serving one's sentence; the Criminal Code offers such alternatives and they should be applied more effectively.

The diversity and development of our culture, the work of our most talented creative artists inspire us with optimism and hope. Last year saw many interesting events to mark the Year of the first Lithuanian book. I regret I cannot mention here all those who have contributed to our cultural achievements; all of them deserve every praise and gratitude. Our culture is opening up to the world, it has become more receptive to the artists and creators of other countries.

Culture, as we all know, cannot exist without the support of the State. And it is this benchmark that allows me to view the work of the Seimas and the Cabinet in the field of culture. Though a great deal of good beginnings have been made, cultural policy still lacks consistency. Laws which would give greater guarantees and adequate conditions of work for creative artists and people working in the sphere of culture are lacking. The Seimas and the Government should try to draft a whole system of laws regulating protection of our historical and cultural monuments, ensuring that our cultural heritage in all its richness and variety is adequately preserved for the future generations. You are well aware of my approach to the restoration of the complex of Vilnius castles that have been given the status of the state cultural reserve. More attention should be given to the analysis of causes resulting in delays and obstruction in this work The same applies to the preservation of the Old Town of Vilnius and other most cherished sites of our heritage. It is our duty to preserve them from decay and to pass them on to the future generations. Let us join our efforts and work towards our common goal, let us not be embroiled in empty squabbles and ambitions, let us not raise artificial barriers which only complicate and impede our work. We can and we must be united by noble goals!

I would like to wish our Government a successful continuation of the state publishing programme which was not adequately funded and received as little as one million Litas. Lithuania's libraries need electronic facilities, better supply of books and periodicals. The depositories for the Lithuanian Language Institute and the Martynas Mažvydas Library have to be completed. The Government has demonstrated initiative in instituting scholarships for young and mature creative artists, in raising salaries for people in the sphere of culture and in making other good beginnings.

In general, all nice words about how concerned we all are about our culture should give place to patient and hard work, to concrete and real steps based on a deep understanding of culture and a vision of its future.

In 1997 we marked the 600^th anniversary of the Lithuanian school. It was a proper opportunity for the teachers and the public at large to take a closer look at the condition of our schools, to review the ongoing educational reform and its future.

This year several forms of our schools have introduced the newly developed curricula. Despite all the difficulties and shortages, a number of new schools have opened their doors. One of such is the 3^rd secondary school in Šalčininkai which was given the name of Lithuania's Millennium It is highly symbolic that this year's first-formers will receive their secondary school certificates in the jubilee year - 2009.

There are less inspiring facts in our schools. Many schools are overcrowded: e.g., some of the secondary schools in Vilnius have as many as 2000 pupils.

The educational reform is progressing too slowly. Law on Education adopted in 1991 did not have provisions about the principal goals of the educational reform which causes unnecessary tensions between various departments. In general, there is a lack of a consistent approach to the educational system, an understanding of its constituent parts, and a link between separate stages of that system. For this reason, the Seimas and the Ministry of Education and Science have been unable to co-ordinate their work; there is little co-ordination in the work of county and local authorities.

The fact that a large number of children of school age do not attend school, and that nobody can tell exactly their figure is a national tragedy. The number of children who are in need of social assistance and children from dysfunctional families is on the increase. School itself should give more attention to such children: more funds should be provided for free school lunches, more support should be given to after-school programmes - sports schools, various societies, children's community centres etc.

One of the key goals of the country's domestic and foreign policy is to guarantee Lithuania's national security. Our security policy is being pursued in two major directions: firstly, to develop the country's defence system that would provide an effective containment in the event of an armed attack, and secondly - to enhance our interoperability with the armed forces of NATO member states.

After Law on the Principles of National Security of the Republic of Lithuania was passed in 1996, the activities of various government institutions became more targeted and concrete. A similar development occurred in the work of the Council of National Defence. Adoption in the spring of 1997 of Law on the Council of National Defence has given this institution a greater role in discussing and co-ordinating the major issues of national defence. For example, at the recommendation of this Council, the 1997 national defence budget was increased 1.5 times and is now nearly 1 percent of the GDP.

The year 1997 was an important year for Lithuania's foreign policy. Major decisions adopted at the NATO Summit in Madrid, the Intergovernmental Conference in Amsterdam and the European Union Summit in Luxemburg have had a direct impact upon us. Though not all of our goals have been reached the results of the above fora have shown that extensive diplomatic efforts have not been in vain and that Lithuania has won a proper place in the international community.

One of the principal and continuing directions of our foreign policy has been and, I am certain, will continue in future - relations of good neighbourhood with the neighbouring states. Lithuania is often cited as a model in this respect for other Central and Eastern European countries, especially after the Vilnius conference last September which was attended by heads of state and governments of twelve countries of the region.

It was not a mere chance that the conference was organised by Presidents of Poland and Lithuania. After March 11, 1990, our relations with Poland had for some time been governed by mutual distrust. A breakthrough was reached only after the summit meetings of 1994 and 1995 during which decisions were made showing that both sides were beginning to have a better understanding of realities of the end of the 20^th century. Lithuania and Poland turned their eyes not to their past and present differences but to the things they had in common.

Today Poland is Lithuania's strategic partner and our relations have never been so good in our history. Co-operation institutions have been created on the level of presidents, parliaments, governments, municipalities, towns and regions. I can assure you that a great deal has been achieved on the level of official contacts. To give greater substance to all these forms of co-operation is our task in the immediate future.

Co-operation with our closest neighbour Latvia has always been based on good relations. I shall refrain from praises and will touch upon some of the problems that still call for attention. Free trade, tourism and free movement of people is obstructed by highly bureaucratic customs procedures and long lines on both sides. We have failed until now to create a single transit area with a system of transit guarantees. This explains why many European carriers bypass our countries. We have to simplify border control procedures on the Lithuanian- Latvian border and give more attention to the security of the external borders of the Baltic states.

Though Estonia is not our immediate neighbour we have always given a great deal of attention to our relations with this Baltic state. Our aim is mutual integration, in particular economic integration which would be a good basis for more effective relations with other countries.

Lithuania's relations with Russia are based on the political treaty signed on July 29 of 1991. Last year, on October 23-25 I was on an official visit to Russia during which a treaty was signed on the delimitation of the State border, on the establishment of an economic zone and on the continental shelf in the Baltic Sea, crowning our work that had lasted for six years. Lithuania is the first country with which Russia has signed such a treaty. It is a proof that relations between the two countries have become more dynamic and constructive.

Owing to the advantages offered by the status of a special economic zone in the Kaliningrad district, the volume of trade with that area is growing. President Yeltsin's initiative to reduce the armed forces in that region deserves every praise. This would, no doubt, contribute to greater stability and mutual confidence.

Lithuania managed to establish and maintain businesslike neighbourly relations with Byelorus: the work on demarcation and installation of the state border is progressing. A large influx of illegal migrants is a difficult problem in our relations with Byelorus. In spite of great efforts of our diplomats, we still are unable to sign a readmission treaty.

We see the Ukraine as one of the most influential European nations in future. Lithuania gives a great deal of attention to her relations with this country, relations that are based on mutual understanding and trust. We think highly of the Ukraine's commitment to promote our bilateral co-operation. An independent, democratic, sovereign and economically strong Ukraine is an important factor in Europe's stability. We are interested in a comprehensive integration of the Ukraine, a major country in Eastern and Central Europe, into European structures.

Lithuania's integration into the European union, NATO and other economic and security structures is proceeding not only through Brussels but also through the capitals of Euroatlantic member states. A favourable opinion about Lithuania of each member state of the European Union is highly valued because all the important decisions in the EU are adopted by consensus.

Co-operation with the United States of America is a key factor for speeding up transatlantic processes of integration. The visit of Presidents of the three Baltic states to Washington and signing of the Baltic American Charter of Partnership is one more evidence of the continuing attention of the US to Lithuania and the Baltic region in general. Bilateral treaties and meetings with high US officials have shown that there are excellent opportunities for promoting bilateral relations not only in the sphere of security but also in economic, scientific, cultural and technological co-operation.

Lithuania's foreign policy should not be confined only to Europe and North America. Asia is an important region that will, no doubt, play an ever increasing role in the economic and political life of the 21^st century. During our visits to Uzbekistan and Kazakhstan we established closer ties with those Central Asian nations.

We have great hopes about developing relations with Japan. During my working visit I came to understand that co-operation between our countries is not as lively as it could be because Japan knows little about Lithuania and has an inadequate understanding of our business potential. A diplomatic mission of the Republic of Lithuania in Tokyo might contribute to a more fruitful co-operation with that country.

Regional co-operation is a priority in Lithuania's foreign policy. It helps to enhance processes of integration. Lithuania is part of several regions; our historical, religious, cultural and political experience puts us in a somewhat different position from the other two Baltic States, securing for us a natural place among countries of Central Europe.

The geopolitical status of Lithuania, as a Central European nation, is highlighted by our drive to become a member of the Central European Free Trade Association (CEFTA). It is our hope that this year, after signing free trade agreements with Hungary and Romania, and after becoming a member of the World Trade Organisation, we shall be able to start negotiations about Lithuania's full membership in the CEFTA.

Nordic countries have always been extremely attentive to the interests of Lithuania after the re-establishment of our independence. Countries around the Baltic Sea share many things: the geographical position, the size, culture and security aspirations. This could explain why Nordic countries were such ardent supporters of Lithuania during our struggle for independence and later on, during our drive for membership of the European Union and NATO. For Lithuania Northern Europe is one of the roads leading to Europe. We should further encourage those countries not to lose their interest in Lithuania, which would provide a greater support for our strategic goals. Today we are beneficiaries of invaluable political and economic assistance from Denmark and Sweden in many spheres, this especially applies to our integration into the European Union. We should not miss any opportunity in future to keep the momentum of such all-round co-operation with those Nordic neighbours. No less favourable relations have been developing with Finland, Norway and Iceland.

Great progress has been made in the co-operation of the Baltic States: we have the Baltic Assembly, the Baltic Council of Ministers, Consultative Councils of Senior Officials. Our countries have consultations on the key issues of foreign policy. There is no doubt that political and economic co-operation between Lithuania, Latvia and Estonia has a good future. Together the three nations form a solid political entity which has greater weight on the international arena. A single economic area of the Baltic States is also more attractive to foreign investors.

The decision of the European Council in Luxemburg not to start pre-accession negotiations with Lithuania early in 1998 should not be viewed as a great disappointment. The analysis and survey carried out by the European Commission in 1996-1997 of our economic development, the legal system and our government institutions helped to bring into focus the issues which call for extra efforts. Many of those issues are being solved successfully. I am convinced that after a regular survey at the end of the year Lithuania will be able to join the pre-accession process.

One of the key priorities of Lithuania's foreign policy is our commitment to join the Western defence and security structures, at the same time supporting all initiatives contributing to mutual understanding, security and stability in Europe.

It is highly important that the Declaration of the Madrid Summit mentioned the Baltic States as countries seeking membership of the North Atlantic Treaty Organisation, countries which have made progress in maintaining stability and co-operation in the Baltic region. On October 9, 1997 Resolution of the North Atlantic Assembly noted that the process of NATO enlargement would not be completed unless the Alliance is joined by Lithuania, Latvia, Estonia, Romania, Slovenia and Bulgaria.

It should also be noted that on the recommendation of the Parliamentary Assembly of the Council of Europe which was adopted in September 1997, monitoring of Lithuania's obligations to that organisation has ended. It is one more proof that principles of democracy, respect for human rights and ethnic minorities have taken root in Lithuania. Representatives of Lithuania are more and more often invited to work at the missions of the Organisation of Security and Co-operation in Europe (OSCE) in foreign countries, to act as election observers.

One of the principal goals of Lithuania is to become a member of the World Trade Organisation and we hope to achieve the goal this year. I would like to inform Members of the Seimas that during our visit to the US, President Clinton assured us of his support in this process.

Striving for wider integration into world economic and political structures Lithuania should maintain closer links with the Organisation of Economic Co-operation and Development. During our meetings with the leadership of that. Organisation in Paris last July I made an official request for Lithuania to be included in a special country programme, which could be of great assistance to us in meeting the challenges of the transition period.

Members of the Seimas,

At the beginning of the 21^st century Lithuania is going to mark a date of tremendous historic significance for our nation - one thousand years from the first mention of Lithuania's name. The name Lithuania was first mentioned in 1009, in the annals of the German town Kwedlinburg, lying at the foot of the Harz mountains. A state commission was formed last year for this event. Among the members of the commission are the most prominent public figures. This jubilee will be an excellent opportunity for all of us to survey our course throughout history and to lay a solid foundation for our country's journey in the 21^st century . We see the second millennium bringing to Lithuania and its people fewer trials, we see more light and truth, we see our hearts filled with unity and love for our country.

Thank you.