He decided not to seek reelection, and retire, in 1998 and was succeeded by Valdas Adamkus, who won the 1998 election.
His direct negotiations with then-President of Lithuania, Algirdas Brazauskas, led to the release, to the New York offices of YIVO for reproduction and cataloguing, of archives that had belonged to YIVO in pre-war Vilna (today, Vilnius, Lithuania), after extensive international coverage of the story.
Creation of such specific unit was first proposed by President of Lithuania, Algirdas Brazauskas, during his speech in Polish parliament (Sejm) in 1995.
He was supported by outgoing President Algirdas Brazauskas and narrowly lost in the runoff to Valdas Adamkus, with Paulauskas gaining 49.6% of vote and Adamkus gaining 50.4%.