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Annual Address by H.E. Valdas Adamkus, President of the Republic of Lithuania (1999)

The Seimas of Lithuania, 30 March 1999

Distinguished Chairman of the Seimas,
The High Seimas,
My dear country fellowmen,

Today I want to discuss with you the concerns of our nation and the guidelines of its development, which, I am convinced, require our attention and joint efforts.

We have entered the tenth year of independence and have good reasons to take pride in the achievements of the independent and democratic Lithuania. Freedom of thought, movement and economic activity, unrestricted possibilities for artistic creativity and independent mass media - they all form the essential features of a functioning democracy.

Still the question may arise whether we, the citizens of an independent state, manage to employ all the possibilities which freedom grants us. Are we, an independent nation responsible for its destiny, able to fulfil all obligations which freedom imposes on us?

It is not by accident that I refer to the nation - a community of citizens. I ask with concern whether we shall be able to survive in the open global environment of the present day as a community united in common values, ideals and expectations. I dare to answer: yes.

Yes, if we are brought together not only by our common past, but also by the vision of our common future and by joint efforts in building that future.

Yes, if we are able to draw on history while building a contemporary Lithuania instead of remaining caged in fears and superstitions of that history.

Yes, if we learn to adjust individual and group interests to the aspirations of the nation and if we preserve the vitality of the spirit of civic solidarity.

A year ago I was elected as the head of the State of Lithuania, with the majority of the citizens having approved the fundamental principles of my programme which read: free individual, open society, strong state. They are the milestones of my projection of the Homeland and its possible way of development. At its core, I see an independent and ambitious individual. The individual whom the state serves by protecting his rights and creating the environment for the all round development of his talents and realisations of his goals and vocation. This conception, in fact, is based on a long-standing tradition in Lithuania. Lawyer Andrius Volanas from Vilnius said already in the 16th century that "…the state has no other, more noble and serviceable goal than freedom." It "stands in the guard of freedom."

I view the community of the Lithuanian citizens as an open society where neither a monopoly of truth nor a single centre of political power exists; where no grouping or party can identify itself with the nation or speak in its name. It should be a self-governed society which perceives the state as an expression of its will, the result of its creativity, the concord of the citizens.

A strong contemporary state does not entail strong power. The genuine strength of a country comes not from obedience of the people burdened by authorities, but from the private initiative of the citizens, their endorsement, ability to co-ordinate different interests and the commitment to the welfare of all.

A strong state means a consistent enactment of the principle of the separation of powers. It also means a state where citizens can distinguish between the state which they build and the elected authorities. Authority is short-lived, the state is long-lasting. I would go even further - only such state can enjoy long years of existence, the authorities of which comprehend their temporariness and do not identify themselves with the state.

The strength of a contemporary state depends on the economic capacity of its people and their ability to independently practise economic activity. The citizens should entrust the state with only those fields of activity, where they are unable to solve problems either individually or in groups of like-minded persons. Only those fields and nothing else.

Civic society and contemporary state of the rule of law. The realisation of such a vision of Lithuania is my primary goal. In pursuing this aim, I have been looking for assistance from you, distinguished members of the Seimas and the Government, from the public servants and the citizens during the first year of my term in office. I am grateful to you all for the understanding and support. I also count on your understanding of the issues raised today.

Having assumed the office, I initiated the reform of the Government and encouraged a consistent modernisation of the State and its public administration. During my visits to the ministries and meetings with the mayors of the municipalities I attempted to find out whether the existing public authorities are able to serve effectively the citizens. My experience, with some exceptions, was not particularly gratifying. We have considerably progressed in creating a red tape state. We have advanced much less, however, in developing an up-to-date, professionally efficient public administration which is sensitive to the needs of the citizens and the nation.

I think that the citizens of Lithuania would like to know and should know precisely what a specific public authority is responsible for and what problems it has to deal with. They should also know what area-specific development strategies they propose and implement and how these strategies fit into the overall vision of Lithuania's future. Regrettably, not only does the society, but also we, its elected representatives, often have a vague understanding of these issues.

The self-government reform, which has been underway for several years already, has not yet reached its goal. It has not involved so far the residents into the decision-making process and has not yet facilitated the establishment of independent local communities. A gap which is so characteristic of the relationship between the nomenclature and the citizens has remained. I am continuously reminded of that by thousands of letters which display the despair of the people who knock against the brick wall of the new Lithuanian bureaucracy. It is an acute problem of our life which requires immediate action. Lack of self-government in practise has become today a serious obstacle in the development of civic society. The citizens' confidence in their state is directly proportionate to their confidence in local authorities and hence to the ability of those authorities to solve problems.

Therefore, I call on the Government to finalise the self-government development programme, which was pledged to be finished last year, and to launch it into action. I am convinced that enhancement of self-government powers is a much more important task than the new territorial-administrative division of the country proposed by the Government. First, we have to create a functioning self-government and only then to draw new boundaries of the municipalities. I believe that no genuine self-government is possible in Lithuania without the ownership of land and other property, without autonomous municipal budgets. I think that the Government should start without delay a constructive dialogue on the budget with the Association of Lithuanian Municipalities. I also propose to consider seriously whether the expansion of powers of the neighbourhoods would not be a more reasonable step than the increase of the number of municipalities. Would it not be more convenient to the people to have their daily problems solved with the assistance of the neighbourhoods to which they are close?

In my opinion it is necessary to review in principle the functions of the counties. These administrative units with almost four thousand employees and the costs of tens of million litas are reasonable in as much as they are able to take over the functions of the central authorities. They should not be allowed to grow, which is regrettably the case today, through assuming or overlapping the functions of the municipalities.

I dare to remind you, distinguished members of the Seimas, that the European Charter of Local Self-Government signed in 1996 has not been ratified yet. Having completed this formality, we would ensure the European dimension of the development of self-government in the country.

The development of self-government in Lithuania should go in parallel with a consistent reform of public administration which is indispensable in order to implement a poorly enacted so far provision of the Constitution which reads that public authorities should serve the citizens. Although the Ministry of Public Administration Reforms and Local Authorities has been active for five years, the reform itself remains fragmented and lacks definite conception and clearly defined strategic course of action.

However, the number of new public authorities increases, although their functions are usually mixed up, poorly co-ordinated and rather often raise doubts as to their expediency. People are fated to wander pointlessly with their troubles through the corridors of numerous institutions, which have remained from the Soviet past and are created anew, failing to understand which of them should issue a certificate or where this certificate should be taken. Such a situation impairs the dignity of our citizens. It is necessary to stop the process of increasing the powers of the authorities as soon as possible.

I consider that it is necessary to essentially review the functions of inspectorates and other monitoring bodies, ministries and agencies in order to structure them and ensure their co-ordination, as well as to finally give up those functions which are inconsistent with a democratic state and restrict freedom of action of the citizens. Public administration reform should free the state management from Soviet thinking and code of practise as well as from the relics of the nomenclature. Public authorities should be easily accessible and transparent. They should involve the people into the decision-making process. Their decisions should be clear and well reasoned in public.

Public institutions should start orienting towards the development of the information society and facilitate the process of its further formation. In the field of public administration, however, new information technologies which can ensure greater efficiency of the authorities are introduced rather slowly and without a clear strategic plan. Up to now, we have not established a system of continuous training of public officers. In the absence of the mentioned steps, the draft law on public service which took a long time for the Government to prepare, is just a formal solution of the problem. Are we certain that after passing the current version of the draft law in the Seimas, a closed caste of public servants will not emerge?

I therefore would like to repeat the idea raised earlier that today our state needs a modernisation strategy. Maybe a council of public administration reforms which has been proposed by the Government could draw up such a strategy and co-ordinate its realisation? The success of its work, however, can only be ensured if the council is formed under democratic principles and if it has the confidence of the people and political parties and is guided in its activities by the idea of civic society and the vision of modern Lithuania.

I believe that commitment to the strengthening of civic society constitutes the basis of a constructive co-operation among the Seimas, the President and the Government. Law making requires today a particular attention, as laws are the main instruments of building a new life of society and new relations among the people. Therefore, legislation should be in the constant focus of our attention. The Constitution assigns me a difficult duty to sign and promulgate the laws which you, distinguished members of the Seimas, pass here. Each time while fulfilling it I feel immense responsibility for the quality of laws and their concrete impact on the life of every individual. I am not entitled, however, to apply to the Constitutional Court whenever a doubt arises as to their constitutionality.

More than once I have promulgated laws without being deeply convinced about their indispensability. Therefore at the very start of my term, I proposed to the Seimas and the Government to set up a joint working group for laying down the principles of and the procedure for drafting legal acts. At that time my voice was not heard. Today I want to congratulate the Seimas on having recently approved the new Statute and on having decided to practise public hearing of laws. I do not doubt that it will ensure a better quality of laws. On the other hand, the improvement of law-making procedure should not, in my opinion, be limited to this practise alone.

The present day requires to have uniform law-making principles which are consistent with the spirit of the state of the rule of law and are fully observed by all actors involved in this work. Legal acts which we draft and adopt should consistently protect human rights, provide for the equal treatment of all citizens and legal persons and should not establish any privileges for some at the expense of others. They should not contradict the general logic of life or violate the natural fabric of life. Laws should be stable and future oriented; they should not change depending on that day political situation or the narrow group interests. Laws should not be conflicting, but should form a harmonious system.

I sincerely share the opinion voiced by the Chairman of the Seimas who said that our laws rather often lack lucidity and are difficult to understand. Not only does the majority of the people, but also the public officials and experts who apply the laws in their daily practise fail to comprehend a considerable part of legal provisions. Even the experts find it difficult to keep track of all amendments and their often controversial interpretation. We do have retroactive provisions which, being such, infringe the interests of the people.

On this occasion I would like to remind that the Constitutions guarantees the right of appeal to every person. The Seimas, however, has not yet passed a law establishing the procedure for filing claims and appeals with public authorities or the procedure for examining those claims and dealing with them. Up to now the flows of letters are re-addressed from one institution to another without a reasoned answer being given or a necessary action taken.

Therefore I refer to the proposal which I made to the leadership of the Seimas and the Government a year ago. Let us set up a joint working group for the improvement of the law-making procedure in order to establish a qualitatively new law-making tradition in Lithuania which would comply with the principles of a democratic state and would respond to the needs of civic society.

The State of Lithuania governed by the rule of law, which we build, should guarantee its citizens that their life will be based on the principles of lawfulness and justice. The national judicial system should serve without reservations to this end. I consider it my direct duty to strengthen it. I maintain that the President should be a reliable guarantor of the independence of courts and should not tolerate even the slightest interference from the public authorities in the work of the courts.

I am worried by the fact that today only 20 per cent of the population have confidence in courts. The causes of such mistrust can be accounted for the ineffective work of the courts and rather often delayed and doubtful decisions of judges. Hearing of cases which lasts for two or three years unacceptably violates human rights. Not for once have I discussed with the judges of different level courts and the Minister of Justice the possible remedies to improve this situation.

I think that the judicial system can be improved at least to some extend by setting the highest moral and professional standards for judges and by ensuring in practise the independence of judicial activities. I was urging the Government last year to complete the formation of the Department of Courts. It seems that we missed quite a lot during the two years when the Department had no director and thus was not able to perform all the duties assigned to it. On the other hand, chairmen of the courts and courts of the higher instance should be more active in supervising the activities of the judges.

I also call on the Supreme Court of Lithuania to pay an increased attention to the formation of a uniform court practise which is most desirable, having in mind that even legal experts are lost in the existing labyrinth of old and new legal provisions. It is no less important to eliminate the remaining gaps in procedural law which will allow the courts to decide simple cases in a shorter time. Today I wish to thank sincerely the judges who presented the required draft legal amendments to the Office of the President. Their analysis has been completed and in the near future I will submit them to the Seimas for consideration.

At the same time I hope that you, distinguished members of the Seimas and the Government, will jointly work to accelerate the drafting and passing of the new codes of law, namely, the Code of Criminal Procedure, Code of Civil Procedure, Criminal Code and Labour Code, the work on which has been protracted. I believe that our joint efforts will allow to establish an effectively functioning system of administrative courts which are to play a particular role within the judicial system. Administrative courts which will deal with appeals of the people against actions of public officials and authorities, should in principle strengthen the protection of human rights and make our life more civilised.

I believe that successful social and economic reforms will essentially strengthen in the future the security of our state and its people. Today security enhancement should become the task of the law enforcement system. Although the ministers and other high-ranking officials of the Interior Ministry have changed more than once, the Government failed to essentially improve the performance of law enforcement structures. The investigation of the murder of Priest Ričardas Mikutavičius, a rather leisurely account to the public of unprofitable electricity supply to Belarus have disclosed serious shortcomings in the work of the prosecutors and the police. The Lithuanian law enforcement system suffers from criminal negligence. There is a considerable deficit of co-ordination of activities and constructive co-operation among the institutions which combat criminal activities. People are becoming suspicious of their ability to act independently, without playing up to a political environment.

In the fight against crime our law enforcement institutions have not used by far all the possibilities provided by the law. The Law on the Prevention of Organised Crime is applied only to small fry. Today the public authorities treat the likely corruption cases with far too great laxity, whereas they should consistently create corruption-free economic and political environment which is possible only by reducing the powers of public officials and establishing stringent and clear rules of their activities. Inability or unwillingness to separate politics from the fight against corruption has become a serious problem. The notorious 'electricity case' has revealed this painful truth. Regardless of political tension arising from it, I urge to stop the spread of corruption and do away with it in public institutions as corruption undermines the economic well-being and the confidence of the people in a democratic state as well as impedes our integration into the Western economic and cultural area.

I think that corruption prevention could be addressed not only by the independent institutions of the State Control, the Office of the Prosecutor General and the Special Investigation Service, but also by the mission of Transparency International which was set up in Lithuanian. Already last year, I invited the United States Administration to set up in Vilnius a division of the Federal Bureau of Investigation, which could considerably assist us in improving the professional proficiency of the Lithuanian law enforcement officials.

Economic independence of the citizens forms the bedrock of a free society. Business people and not the people dependent on the state are the backbone of a contemporary society. A strong backbone is a precondition of the economic power of the nation.

The possibilities of independent economic activity have considerably increased during the years of independence. A sizeable part of the population started their private businesses. Their economic activity has essentially strengthened the national economy, the positive development of which can be illustrated by a number of macroeconomic indicators: the GDP growth rate, the increasing volume of foreign investments, etc. The capital market of Lithuania managed to avoid tragic losses even in the face of the Russian crisis. We have managed to maintain strong litas which proves the expediency of the introduction of the currency board system in Lithuania five years ago. Today I fully support the efforts of the Bank of Lithuania to further pursue strict monetary policy and to gradually peg the litas to the euro without devaluating it. However, in order to avoid possible threats to the litas, we need to address already today the problems of a huge public debt and financial viability of the largest public enterprises.

Generally speaking, the current economic policy should refrain from bewitching the reality with far too optimistic incantations. We should have a sober approach to the problems which emerge in the development of the national economy, to openly identify them and search for effective remedies. The growing budget expenditures have exceeded over the last years the growth rate of the national economy which means that the state has started to live beyond its means.

Consequently, we have lower budget revenues, the growing debt of "Sodra", delayed payment of pensions and hence undernourished single elderly people. On the other hand, around a half of the Lithuanian companies suffer losses; part of them do not pay salaries to workers; agricultural companies do not pay back their debts to farmers for up to six months. The unemployment level has jumped considerably.

Has the business environment improved over the period in question? Small and medium sized businesses justly complain about private business conditions in their letters addressed to me. I am convinced that the Lithuanian people are not short on initiative. They know what and how to sell. Our task, however, is to let them work without forgetting at the same time that this year the economic activity of the state has failed to produce sufficient effectiveness. Debts of the companies "Lithuanian Energy", "Lithuanian Railways" and "Mažeikių Oil" will soon tell on the entire population. The country has suffered huge losses because of the inefficient management of the energy industry and the delay of its restructuring. In general, the Lithuanian energy system is not profitable. Construction of the power transmission lines connecting Lithuania with the western power system has not started yet. Electricity is supplied to Belarus without any settlement guarantees. Thus we subsidise the economy of a neighbouring state. Accumulation of the funds for the decommissioning of the Ignalina Nuclear Power Plant has not started yet. Up to now the National Energy Strategy has not been approved by the Seimas. I call on you to focus on this document of national importance, which should lay down the rules of rational management of the energy industry.

Given the current economic difficulties, the country requires a well-considered economic development policy based on clear principles. In my opinion, deregulation of the national economy is the main task. A contemporary state should abandon direct management of economy and restrict interference in the activities of private companies.

The task of the state is to ensure the most favourable conditions for economic activity, fair and open competition and free movement of capital and goods. It is therefore expedient today to accelerate privatisation of public and municipal companies and sale of their shares, ensuring at the same time the maximum transparency of the privatisation process. To achieve this, we could make better use of the market infrastructure and the stock exchange. During my visit to the New York Stock Exchange I received a proposal to list at least one Lithuanian company on the New York Stock Exchange and I would urge our Government to make use of it.

At the same time I support the initiative of a group of members of the Seimas to include without delay the representatives of the opposition parties into the Privatisation Commission. This move would provide for a greater transparency, and hence reliability, of the privatisation process.

The state budget receives billions of litas from privatisation. It is most important that these funds are used for financing strategic development programmes rather than 'mending the holes' of the budget. I maintain that they should be used to finance only those programmes which were considered and approved by the Seimas. I hope that you, distinguished members of the Seimas, will support this opinion.

Successful economic development of Lithuania is not feasible without private investments coming from both domestic and foreign sources. Promotion of foreign investments was and is a priority of the foreign policy which I pursue. At present, the most important to our country are the investments which come from privatisation and direct investments made into new companies. They create new jobs, help to introduce new technologies in our industries and promote the advanced management methods. I sincerely support the efforts of the Government to facilitate the flow of private investments by changing the principles of taxation. I should note, however, that investors are interested in the general economic situation of the country which, as the surveys conducted among them show, has not improved during the recent year.

It is upsetting that Lithuania loses potential investors from the West due to the insufficient transparency in business relations, clash of group interests, bureaucratic obstacles and the flaws of taxation system. These losses are likely to increase, if we do not accept or live by the business code of ethics applied in the democratic world.

I think that a modern, corruption-resistant economic policy must follow the principle of the separation of business and the state. The state should avoid subsidising both public and private companies. It can and must assist the businesses by removing bureaucratic barriers and by creating a clear taxation system favourable to them. We should establish conditions for a wide range of economic activities, including those which today are ascribed to the competence of the state and which have not been practised in Lithuania so far.

The current complicated and defective taxation system impedes the development of businesses and makes the companies suffer significant losses. Not for once I have pointed out these problems to the Government, inviting it to abandon as soon as possible the current mending of the system and to start creating a qualitatively new taxation mechanism. Today I propose to create a new tradition this year - to review the taxation system while considering the state budget in the Seimas. To review the system in order to make it clearer and more logical, to ease the burden of irrational taxes and to ensure the stability of taxation rules throughout a financial year. The Lithuanian entrepreneurs must be sure that their annual estimate of income and expenses will not be ruined by unexpected resolutions adopted by the Government or laws passed by the Seimas.

Some time ago we started to co-ordinate with the Government the proposals presented by my working group for solving the most acute taxation problems. I believe that common work and search for decisions will allow to create a more favourable business environment.

The reform of the state budget has not lost its importance to the future development of our state and national economy. The current feature of the budget - allocation of funds to concrete long-term programmes, is most welcome. Efforts should be further supported to at least partially adjust the needs of the state to the possibilities. Still it seems that budget formation was based on a far too optimistic forecast of the development of the national economy and the consequences of the Russian crisis were not given a realistic evaluation.

Besides, the state failed to give a reasonable answer to the question as to which problems can and should be solved by using the taxpayers' money. No principle consideration has been given as to which functions of the state must be financed from the state budget. I believe that you, distinguished members of the Seimas, will pay due attention and give well-reasoned answers to all these questions, which are of particular importance to the general modernisation policy of the State.

Another problem which is becoming increasingly pressing is unsustainable socio-economic development of the country. The disparities in the life of various regions and social situations are becoming increasingly bigger. Can we clearly say today what the future of agriculture in Lithuania will be? Our agricultural sector which has been a solid pillar of the nation for a long time requires today immediate attention of the State. In spite of all the efforts of the authorities to make the life of rural dwellers easier, it has not become brighter. Therefore we have to review the current agricultural policy. I believe that the Government should develop it into a complex rural development strategy.

Our agriculture faces serious problems: sluggish land market, ineffective state regulation and unfavourable conditions for the development of non-agricultural businesses in rural areas. These problems are aggravated by the moral weariness of rural residents and their insufficient belief in the future. Over 20 per cent of the economically active population are engaged in agriculture. It is obvious that not all of them will be able in the future to earn their living from farming. Therefore education and development of non-agricultural businesses are the most essential elements of the current agricultural policy. The State should provide the young people who live in rural areas with a possibility to acquire a good quality general education, to study at the university and thus to acquire different professions. At the same time, the State should proceed with agricultural restructuring. The on-going return of land is only a prerequisite for the real land reform, whereas the reform itself should be linked to the development of the land market and creation of conditions for the establishment of large-scale farms. People should have a possibility to lease or buy land. I also maintain that the time has come to consider the expediency of granting the right to legal persons to acquire agricultural land as well as to simplify and make less costly the procedure for changing the location of agricultural land plots. I propose to allow the municipalities to use and dispose of non-agricultural land this year. This measure will provide for a considerable elimination of bureaucratic barriers encountered by the people who want to acquire or lease land.

We should also gradually give up the overall state regulation in agriculture. Enormous debts of the downstream enterprises to farmers and the situation in which the processing companies are made to go bankrupt testify to its inefficiency. The State is not able to solve the problems of farmers through direct regulation of prices. We should have a realistic view of the future and start preparing for global competition.

We do not live in an isolated economic environment. The world as well as the neighbouring markets have a deep influence on our domestic markets. If we want to establish a more favourable environment for trade in agricultural products, we should accelerate the talks on our membership in the World Trade Organisation and work towards creating a wide network of bilateral and multilateral free trade agreements. It would be more expedient to move from direct price regulation to the income support policy.

Successful economic development decides to a large extent the social security of the people of Lithuania. Therefore both social and economic development programmes should be coherent, pursue common goals and supplement each other. The task of politicians, our task, is to guarantee the support of the State to those who cannot cater for themselves. But healthy and active people need jobs which are the best form of support. As the surveys indicate, job has become the most acute problem for many people. Therefore I think that promotion of the creation of new jobs should become a strategic social development task of the Government. Successful fulfilment of this task is possible only with the help of the private sector and hence the creation of favourable environment for its development. Today the State no longer has a monopoly of creating new jobs. Over 70 per cent of our population are employed in the private sector. Therefore the role of the state in establishing conditions for the creation of new jobs remains particularly important.

According to the official statistical data, almost 17 per cent of Lithuania's population live in poverty. And the main reasons for it are unemployment and a low level of education of the people.

Therefore, I think, the creation of new jobs and the development of vocational education and training are directly linked with the national poverty elimination programme. I have set up an ad hoc committee which consists of public officials and representatives of the society to draft such a programme. I hope that already this year the commission will be able to propose a complex action plan for poverty elimination.

Today we also need to improve the social support system. It requires a more effective administration and funding. This system should reach every person in need of support, but should not allow for wasting the money on those who do not require it. It would be appropriate to expand the powers and responsibilities of the municipalities in the field of social support and to essentially increase the role of social workers. I believe that today the State should pay an increased attention to the social needs of young people and the distressing problems related to the protection of children's rights. I call on the Government to accelerate the housing crediting programme for young families. It would be appropriate to increase scholarship funds for students. We, the politicians, must diminish the nihilism of our young people and to strengthen their belief in their own future and the future of the State.

The current social insurance system and the budget of "Sodra" which can hardly make both ends meet also cause a number of concerns. I am certain that in the future private initiative will gain ground in the field of long-term social insurance and a reliable system of private pension funds, which will supplement the state insurance, will be established.

Thus I want to propose to the Seimas and the Government to refrain from declared but not executed social policy. The expenditure of "Sodra" can be increased only if we are certain that it will have the required revenues. I believe that the people of Lithuania expect practical realisation of the obligations assumed by "Sodra" rather than the pledges of the authorities, which fail the reality.

On the other hand, it is necessary to constantly look after the administration of the state social insurance and ensure its effectiveness. The decision to establish in a small country two separate - social and health insurance systems was hardly reasonable. We could have saved most probably a considerable amount of taxpayers' money, if the patients' funds were established as independent units of "Sodra".

The reform of health care system today should lose neither its pace nor, most importantly, its consistent orientation towards the needs of the people. It is difficult to understand and justify those changes of the system which burden the patients.

It is desirable that the health care system in Lithuania would acquire as soon as possible the features characteristic of a modern state; that the prime attention would be paid to disease prevention; that medical insurance should function in practise; that the national health care system should allow for a level playing field for all actors, including private medical care. Only then will the people of Lithuania have a real and not imaginary freedom to choose medical services. Only fair competition can ensure the improvement of the system and the quality of services provided by it. Last year you, distinguished members of the Seimas, approved a highly important document - the health care programme for 1998-2000. I hope that upon its realisation this programme will significantly contribute to the improved health of the people.

Today modernisation of the State should go hand in hand with all-inclusive modernisation of the society and the programme of formation of civic society where the central place is given to education reform. The time has come to raise education to the level of the highest national priority of the State and to prove its validity by concrete steps rather than election campaign slogans. Education is an instrument for the development of an advanced Lithuanian nation and we, as a community of citizens, shall lose a lot if we fail to use it in the best possible rational way. By setting education aside for 'a better future', we suspend it.

In a dynamically changing contemporary world education becomes a key condition in ensuring a secure future and successful life of any Lithuanian citizen. At the same time it is a prerequisite of the security and cultural and economic power of the nation. The most recent surveys show that the economic well being and health of the people, justice administration, even life expectancy and hence the overall life quality of society, depend on education. Therefore the State must concentrate on education which is the guarantor of its future.

Today I feel guilty about failing last year to persuade you, distinguished members of the Seimas, to take account of the actual needs of education while approving the state budget for this year. There are serious doubts already that due to the shortage of funds a considerably lower number school students will be able to enter vocational schools and thousands of young people will be left in the streets. I hope that due attention will be paid to the needs of education while adjusting the budget of this year and drafting the next year budget. I welcome the efforts of the Government to raise the salaries of the teachers. I think, however, that our efforts should not be limited just to this move.

During my visits to schools and meetings with teachers and students I am asked a number of painful questions. Students ask when they will have modern studying facilities, when the school will be able to prepare them for a complicated present-day life, when those, who come from low income families, will be able to study at the university. Parents from eastern Lithuania inquire in their letters how long their children will have to walk long kilometres to a Lithuanian school each morning, when the new text-books will reach the school, whether their children will receive free lunch at school if the family is not able to pay for it. I believe that we should also find the funds for the transformation of education and for creating social conditions for studies.

The State should be also concerned about the idle children who do not complete basic or secondary education and about gifted young people who are not able to study at the university due to financial constraints. By failing to provide adequate studying conditions, we ruin their future. By failing to ensure the adequate quality of education, we make their lives less secure. Vitally important today are investments of the State into teaching and learning materials and facilities: manuals, computers, upgrading of teaching, reconstruction of schools and universities and, finally, providing meals for children from low-income families. All families concerned about the future of their children and young people who aspire to education are waiting for all these changes.

On the other hand, the State should establish more favourable conditions for private initiative in the field of education. So far only individual enthusiasts venture to open private schools. They fail to receive both a more substantial support of the municipalities and the attention of the Government. Instead they rather often encounter artificial bureaucratic obstacles. The fact that no private high school has been opened in Lithuania during the ten years of independence makes one wonder why.

Long-term strategy is required to ensure a successful implementation of the transformation of education. At the beginning of this year, I set up a working group of education experts and representatives of different parties who will draft it. I believe that all - the political parties, the public authorities and the public at large, should reach common opinion on the vision of the Lithuanian school. This vision would allow the public to understand that the education reform, instead of being a constant source of threat, is a guarantee of its security. Then, the National Education Development Strategy approved by the Seimas could provide for a concrete timetable and the required funds. Thus we could ensure a consistent and well-oriented transformation of education.

Culture and science today face, among other tasks, the responsibility for facilitating the development of the contemporary identity of the Lithuanian society. The current policy pursued in these fields should overcome the isolation typical of the Soviet time and become an integral part of the overall policy of the State. Lithuania needs clearly defined priorities of the development of culture and science which would be coherent with the present evolution of society. We need effective tools that would encourage creativity in science and culture.

Our science still fails to react flexibly to the socio-economic needs of the country. Being financed basically from the state budget, it has lost to a certain extent the natural unity with the socio-economic development of Lithuania. The present day policy fails to overcome the inertia of science and art administration practised by the nomenclature in the past.

We have talented, world known scientists and artists whose creative activities have born fruit during the years of freedom. But a sizeable part of public scientific and cultural institutions experience today the shortage of intellectual and artistic vitality.

I believe that the change of the principles of funding - a more consistent arrangement of financing of scientific and cultural programmes and the strategy of education of young scientists, could stimulate their rebirth. We should search for the ways to attract to our universities young scientists educated abroad. Furthermore, it may be expedient to gradually move from scholarships, which the State grants to several hundreds of artists and scientists, to authors' funds. Museums, theatres, concert organisers as well as publishers of cultural and scientific publications which would administer them could be able to promote and directly support scientists and artists.

I also think that it is necessary to review the current priorities of the cultural policy. This policy should inter alia centre on a balanced spread of culture and accessibility of cultural values. Mass media could also play a greater role in this context, provided adequate avenues are developed. And, certainly, more attention should be paid to the cultural education of children.

Given the growing disparities in the cultural development of the regions, libraries and museum should perform an enhanced role in the fields of education and information. I think that the Government should adopt a national library revival programme which I view as an integral part of a more important, large-scale project aimed at creating the information society in Lithuania.

A serious shortcoming of the current cultural policy is an immense gap between the abundance of books which are rather often published with the financial assistance of the State and the scarcity of publications in provincial libraries. The libraries should be reorganised into modern information centres which are open to all and serve as a catalyst in the development of the information society.

While promoting social development, the current science and cultural policy of Lithuania should not neglect another strategic task of contributing to the growth and maturity of a new generation of intellectuals. The generation which is committed to national culture and is able to consider responsibly the common issues of European and global development. The generation which is able to develop an open to the world national identity.

Well-thought and sustainable development of the country can be achieved only through a coherent economic, social and environmental development of Lithuania and by properly balancing out its elements. I think that the general environment management plan which is currently under preparation will substantiate and legitimise this development provided it does not undermine private initiative.

This plan will help us avoid ungrounded and detrimental to environment projects and building new airports or bridges across the lagoons. Ours is the country of a fragile and vulnerable nature. Therefore, environment management should always be in the focus of politicians and the public at large.

A modern Lithuania, which we are striving for, must have a secure future. Today, it can be ensured only through a consistent integration into the Euro-Atlantic defence structures. We should therefore strengthen our national defence force to adequately prepare for the membership of NATO, viewing the North Atlantic Alliance as a guarantor of democratic values. Last year you, distinguished members of the Seimas, passed the law on the organisation of the national defence system and military service. The National Defence Council approved long-term programmes of national security enhancement. These documents along with the increased defence spending constitute the necessary basis for the restructuring of the Lithuanian Armed Forces according to NATO standards. It is important that the restructuring is carried out in a consistent and purpose-oriented manner and that the funds, which are considerable, are used rationally and cost effectively.

The most important task of the present day is to renew the army infrastructure so that the Lithuanian citizens consider military service a noble duty. Without changing the general standards of culture in the army and without creating a new philosophy of military training we shall not be able to achieve these goals. Training of the Lithuanian soldier should be oriented towards raising him as a citizen of a democratic state. Living together should build up the feeling of solidarity among soldiers and develop their communication and co-operation skills.

I maintain that at present, as well as in pre-war Lithuania, the educational role of the army is particularly important. Up to now the children of well-to-do and socially influential families avoid military service. Therefore, around 70 per cent of conscripts do not have secondary education. It would be appropriate in general and right from the social viewpoint to combine military training with general education. Broader education of soldiers is feasible only if defence spending is further increased.

Therefore I ask the Ministers of National Defence and Education and Science to pool their efforts to work out special curricula for soldiers. In my opinion, they should include such subjects as the English and Lithuanian languages, computer literacy, ethics and the introduction to the principles of civic society.

At the same time it is necessary to introduce into military training programmes of soldiers and officers the requirements applied in the NATO member states, to approve the national security and defence strategies and the mobilisation reserve programme. Undoubtedly, the combat power of the army should also be strengthened.

By participating in international peace keeping missions and setting up joint military units with the neighbouring countries, Lithuania contributes today to the creation of a comprehensive European security. I think that the future of Lithuania will depend to a large extent on its ability to act independently, but with responsibility and in solidarity with other members of the international community.

We live in a uniting Europe and a uniting world. The world in which interdependence means survival. Therefore Lithuania's independence in the 21st century is possible only through its active involvement in the creation of the common future. Integration into the Euro-Atlantic structures does not curtail but, on the contrary, expands our freedom of choice. By introducing the European Union standards, we strengthen the foundation of a democratic state and civic society. On the other hand, it is in our interests to join as soon as possible the ranks of the states which establish the rules of coexistence. Being late means the adoption of an increased number of standards developed without our participation.

These are the main guidelines of the Lithuanian foreign policy which I pursue. In this field I continue the work started earlier. We further develop good neighbourly relations and integrate into the Euro-Atlantic area. Last year, however, our advance towards the Western structures did not bring us the expected success. But the high standards of the European Union which is currently going through internal reforms helped Lithuania have a more realistic picture of itself. It has become obvious that the main obstacle faced by our country is a too slow and inconsistent course of reforms rather than the shortage of statistical data and information about Lithuania or 'the image of Lithuania'. Therefore I have focused in my annual report on the necessity to accelerate internal reforms.

Distinguished members of the Seimas,

In my opinion, the transformation of life in our State and socio-economic reforms are directly linked with a constructive co-operation among the public authorities, which is based on the tradition of mutual trust and keeping one's word. These traditions should be further developed not in the fight for the spheres of influence or by playing the games of power, but on the basis of the principles of common work and by consistently protecting and defending the independence of the main public authorities for the benefit of democracy.

At the same time I am convinced that the renewal of the State of Lithuania can be ensured today only by a new open and reliable policy based on dialogue. Such policy will be feasible only when all political parties - the majority and the opposition, speak a rational but not emotional language; when they listen more carefully to the arguments on both sides and to the opinion of the public at large. Our policy will be more reliable, more readable to the citizens, if the authorised representatives of the nation and the public officials appointed by them raise, debate and solve publicly the strategic issues and if they directly and openly respond to the acute problems of our life.

Distinguished members of the Seimas,

We still have two more years of common work. I would like them to be accompanied not by petty conflicts, but by understanding which prevailed during the time of Sąjūdis and which was based on tolerance, the spectrum of opinions and fearless political creativity. I am convinced that this is what the majority of the Lithuanian people expect; this is what we need today in order to fulfil the difficult tasks of the creation of the State. In the face of these tasks we should remember a parable about small children in a village which Vincas Kudirka told the Lithuanian intellectuals a hundred years ago. "Sometimes a few of them come together to build a house. They start the work zealously, with glowing eyes, and enjoy every moment of bringing the sticks and arranging them into the walls of the house. If a stick is too short or too bent and therefore is thrown away, the child who brought it frowns, starts crying and finally destroys the house in anger. 'If not me, then nobody else will live in it,' he says and walks away."

Being the head of the State I see it as my duty to safeguard the concord, to enhance the creative powers of the society and to promote civic solidarity in Lithuania.

The Constitution places a huge burden of moral and political responsibility on the shoulders of the President, but grants limited powers to fulfil the obligations. Still, the President has the duty to lead the State. He is the only official directly elected by all citizens of the country. People, their confidence and support, are the main source of the President's moral and political power.

Therefore I will always represent the interests of all the people and not of individual political parties or economic groups. I have no monopoly of truth and do not claim it. But I have an important duty to encourage the dialogue between the politicians and the public authorities, to raise the problems and protect the common interests of the society and the democratic state.

Distinguished members of the Seimas,

I invite you to discussions and open exchange of opinions. Yet, the discussion should centre on the essential issues of the life of the nation. Having found the solutions, we should conscientiously work for the benefit of all the people and the State.

May the words of the late Stasys Lozoraitis uttered six years ago strengthen us in our endeavours. He said, "We are strong and talented. We only have to collect our will, to get rid of disappointment and stagnation. We should have confidence in ourselves, in our strength and should believe, expect and love. We should know what we want and move towards the future. Every minute without action is a dangerous minute. The world changes dynamically. We should also change in order to change Lithuania."

Maintained by the Office of the President of the Republic of Lithuania. Please specify source when quoting.