After decades of rule under the Soviet system — diametrically opposed to the principles of a free society — Lithuania would seem to represent a difficult environment for a market-oriented think tank.

Yet, against all odds, the Lithuanian Free Market Institute (LFMI) has achieved enormous success. The LFMI’s determination and creativity serves as a wonderful example to institute entrepreneurs around the world. It is the story of an institute that has both remained ideologically principled and become enormously influential in implementing market reforms.

Hardly a day passes by without a Lithuanian Free Market Institute (LFMI) opinion featured prominently in the national press. The institute’s policy analysts are frequently featured on television and radio interviews. Their opinions are highly sought by the president and his advisors. Its ideas have been adopted by the Lithuanian government and implemented as national policy.

When asked how (LFMI) managed to achieve such influence, its president, Elena Leontjeva replied, “People comment on the institute’s growing visibility, but they hardly know how much more invisibly present we are behind the scenes of national policy. LFMI has reached this position of influence by acting invariably in line with its core principles — economic liberalism based on individual freedom and responsibility, free market and limited government — being both soberly practical and innovative.”

Like so many other institutes that have been successful in influencing public policy, LFMI saw an opportunity amidst the government largess and corporate welfare mentality that dominated Lithuania. Surrounded by bankrupt socialist ideas, they developed a successful strategy to capitalize on an alternative vision. From the start, LFMI stood in opposition against subsidies, tax benefits and other handouts for selected businesses. The new challenge, however, lay in making a persuasive case for economic prosperity by improving business conditions, downsizing bureaucracy and lifting the tax burden, while doing away with functions that are improper for the government. LFMI knew that there was no sense in attempting piecemeal reforms and realized it had to move beyond its initial isolated efforts by initiating a groundbreaking movement and developing a strategy for it.

Early on, the institute examined the issue of business regulation and quickly concluded that existing governmental policies had no clearly defined objectives. Consequently, they developed a proposal to identify regulatory goals. Once the range of goals was identified, LFMI analyzed alternative policies to see how they fared in terms of consumer safety, information disclosure, interest protection, and other measures. Their analysis also focused on an added dimension: how do existing governmental barriers crowd out more efficient private solutions? LFMI confronted the administration with its comprehensive policy recommendations and was successful in achieving significant regulatory reform.

LFMI’s approach to deregulation planted seeds in people’s minds, showing how the private sector could play a stronger role. One by one, officials began to change their rhetoric, increasingly stressing the need to curb the bureaucratic machine. The ideas became so popular that the new cabinet, formed in late 1999, started its term by launching a Sunset Commission to get rid of unnecessary bureaucracies, with LFMI’s president, Elena Leontjeva, as the only nongovernmental member. The institute did not simply salute this initiative, but flooded the officials with strategic objectives and action plans, including recommendations for screening state functions.

Another new initiative was named Sunrise, after LFMI published an article, Sunset for Bureaucracy, Sunrise for Business, which explained the need for improving Lithuania’s business climate. LFMI policy analysts were invited to head the two main working groups of the Sunrise Initiative, one of them working on tax issues and the other on business regulation. These efforts have been a unique opportunity for the institute to devise solutions, allowing LFMI staff to discover the inner workings of government and make its voice heard. Their efforts were amply rewarded when Lithuania’s leading daily described LFMI’s president as the “senior meteorologist of the government, directing all those sunsets and sunrises.”

Last month, LFMI presented A Handbook for the 2000-2004 Members of Parliament and their Voters. The Handbook is intended to influence electoral programs for the 2000 parliamentary elections with an eye towards sound principles and action plans. It also serves as a guide to help newly elected officials implement reforms quickly and coherently. Needless to say, the Handbook also serves to educate voters. By virtue of its scope and style, it will also be a valuable guide to people interested in the free market. LFMI has always stressed that whatever the ideology of a government, there is no way to prosperity other than freeing peoples’ initiative, removing business constraints and sizing down the state.

LFMI has worked well with the various administrations and political parties that have governed Lithuania over the past ten years. Its record illustrates the importance of making the right ideas “fashionable” before elections. In summing up their winning formula, Leontjeva offered these sage words of advice, “Make your idea theirs, and they will need you to implement them.”