Continuing CHAPTER I


IAEA Verification

Strengthened Safeguards System

Comprehensive safeguards agreements and additional protocols
During 2004, the Agency continued to secure broader acceptance of its strengthened safeguards system.1 The number of States for which the Agency was implementing strengthened safeguards increased from 41 in 2003 to 64, including 19 additional States with significant nuclear activities. This substantial increase was due to the entry into force in April 2004 of the additional protocols for the-then 15 States of the European Union. However, about 100 States still had not concluded additional protocols to safeguards agreements - including 15 States with significant nuclear activities. Five more States parties to the NPT concluded comprehensive safeguards agreements with the Agency in 2004.
The application of comprehensive safeguards agreements and additional protocols remains crucial for the Agency to be able to provide credible assurances of the non-diversion of nuclear material placed under safeguards and of the absence of undeclared nuclear material and activities for the State as a whole. In this connection, the Agency's Plan of Action to Promote the Conclusion of Safeguards Agreements and Additional Protocols2 continued to focus on the Secretariat's efforts to promote and facilitate wider adherence to the strengthened safeguards system. In line with that plan, in 2004 the Agency held seven national, regional and international training events for State systems of accounting and control of nuclear material (SSAC). In addition, the Agency held regional seminars for the western and southern African regions as well as for Pacific Island States.

Integrated Safeguards 3
By the end of 2004, integrated safeguards were being implemented in six States, including Japan (September 2004) - the first State with an advanced nuclear fuel cycle to have integrated safeguards applied. Two independent evaluations of the Agency's safeguards activities in 2004 commended the overall effectiveness and efficiency of safeguards application and stressed the importance of giving continued priority to the implementation of integrated safeguards in States with extensive nuclear fuel cycle programmes.

Safeguards Implementation

The verification activities of the Agency remained under challenge in a number of ways - the discovery of undeclared nuclear programmes and activities; the emergence of covert nuclear supply networks; and the acquisition of sensitive nuclear know-how and technologies by additional countries. During the year, the IAEA responded to those challenges by investigating and analyzing the activities of covert nuclear supply networks and conducting verification activities.
By the end of 2004, a total of 923 facilities and locations outside facilities (LOFs)4 were under Agency safeguards, along with nearly 164,000 tonnes of nuclear material, including 15 tonnes of fresh high-enriched uranium, 89 tonnes of separated plutonium, and 450 tonnes of heavy water.5 During 2004, the Agency performed 2,302 safeguards inspections in 598 facilities and LOFs. The regular budget for safeguards was increased by 12.4 per cent to $104.9 million. In addition, US $16.3 million was spent from voluntary contributions on safeguards equipment and services.

Expert Group on nuclear fuel cycle
In June 2004, the Director General appointed an international expert group to consider possible approaches to the front- and back-ends of the nuclear fuel cycle - uranium enrichment, plutonium reprocessing, and storage and final disposition of spent nuclear fuel.6 The Group, consisting of 26 experts drawn from nuclear-weapon and non-nuclear-weapon States and non-NPT States, participating in their personal capacity, was to hold four one-week meetings and to present its report to the Director General by March 2005 in time for the 7th Review Conference of the Parties to the NPT.

Democratic People's Republic of Korea (DPRK)

Since December 2002, the DPRK has not permitted the Agency to perform any verification activities on its territory, therefore the Agency could not draw any conclusions regarding that State's nuclear materials or activities.7 The situation in the DPRK continued to pose a serious challenge to the NPT regime. The Agency continued to maintain its capability to resume verification in the DPRK at short notice.

Islamic Republic of Iran

In 2004, the Agency further enhanced its understanding of Iran's current and past nuclear programme and continued to carry out verification activities with the cooperation of Iran in order to clarify outstanding issues. Reports by the Director General were made to the March, June, September and November meetings of the Board of Governors, which adopted four resolutions on the implementation of safeguards in Iran.8 The March report noted, inter alia, that all declared nuclear material in Iran had been presented to the Agency for verification, that Iran had been actively cooperating with the Agency in providing access to locations and that corrective actions were being taken. The report also noted the continuing need for clarification regarding the nature and scope of Iran's activities. The Board, inter alia, welcomed Iran's signature of the Additional Protocol, noted with concern that omissions had come to light regarding Iran's nuclear activities, and that questions remained to be resolved.
The Director General's June 2004 report welcomed Iran's submission of its initial declaration pursuant to its Additional Protocol as well as the progress achieved on agreed actions. However, the report noted, inter alia, that two issues were outstanding: understanding Iran's P-2 centrifuge programme and the origin of contamination of high- and low-enriched uranium. The Board expressed concern that Iran's cooperation had not been as full, timely or proactive as it should have been and called on it to undertake further confidence-building measures.
The September 2004 report again noted that resolution of the questions of contamination and the P-2 centrifuge programme were still outstanding. The report also noted that the Agency continued to make steady progress in understanding Iran's nuclear programme and added that the Agency had been able to verify Iran's enrichment-related activities at specific facilities and sites.
The November 2004 report recapitulated the Agency's findings on Iran's nuclear programme since September 2002. It noted that the Agency had concluded that all declared nuclear material in Iran had been accounted for, and that such material was not diverted to prohibited activities. However, the Agency was not yet in a position to conclude that there were no undeclared nuclear materials or activities in that State. The process of drawing such a conclusion, based on the implementation of all safeguards measures including those contained in the Additional Protocol, is normally a time consuming process. Drawing such a conclusion in the case of Iran could be expected to take longer than in normal circumstances given its past activities. The Board welcomed Iran's decision to continue and extend the scope of its voluntary suspension of all enrichment-related and reprocessing activities. At the Board's request, the Agency continued monitoring Iran's voluntary suspension of all of its uranium enrichment related and reprocessing activities.

Libyan Arab Jamahiriya

The Director General provided reports on the implementation of safeguards in Libya in March, June and September 2004.9 The March report noted that, over an extended period of time, Libya was in breach of its obligation to comply with the provisions of its comprehensive safeguards agreement. The report also noted that Libya's undeclared nuclear programme had focused on developing nuclear weapons. The Board welcomed Libya's decision to eliminate materials, equipment and programmes leading to the production of nuclear weapons as well as its decision to sign the Additional Protocol and to act as if it were in force.
The Board adopted a resolution in March in which it stated that under Article XII.C of the Statute, Libya's past failures to meet the requirements of its NPT safeguards agreement constituted non-compliance and, in accordance with that Article, requested the Director General to report the matter to the Security Council for information purposes only.10 The Director General reported to the Security Council on 11 March 2004. In its Presidential Statement of 22 April 2004, the Council stated that it welcomed the decision by the Socialist People's Libyan Arab Jamahiriya to abandon its programmes for developing weapons of mass destruction and their means of delivery and the positive steps that it had taken to fulfil its commitments and obligations, including its active cooperation with IAEA.
The June and September 2004 reports noted that Libya had submitted its initial declaration under its additional protocol and that it had provided good cooperation with the Agency. At the end of 2004, the Agency assessed that Libya's declaration regarding its uranium conversion programme, enrichment programme and other past nuclear-related activities appeared consistent with the information available to the Agency and verified by it. It also noted that Libya had taken corrective actions, but underlined that verification of the completeness and correctness of Libya's declarations remained ongoing.

Other Safeguards Implementation Issues

Republic of Korea

In August 2004, following the submission of its initial declaration under the Additional Protocol, the Republic of Korea (ROK) informed the Agency that on a number of occasions and without the Government's knowledge, laboratory-scale experiments that involved the production of small quantities of enriched uranium at a nuclear site in ROK in 2000 had not been reported to the Agency.11
The Director General submitted a report to the Board in November containing the preliminary findings of the Agency's investigation of the information received which indicated that the quantities of nuclear material involved in those undeclared activities were not significant. Nonetheless, the nature of the undeclared activities - uranium enrichment and plutonium separation - and the failure of the ROK to report those activities to the Agency was a matter of serious concern.
The ROK however had taken corrective action and actively cooperated with the Agency's investigation, providing information and access. Based on information provided by the ROK and verified by the Agency, there was no indication that the undeclared experiments were continuing. By the end of 2004, the Agency was still in the process of verifying whether ROK's declarations were correct and complete.

Egypt

In 2004, the Agency identified several open source documents published by the Egyptian Atomic Energy Agency that indicated the possibility of unreported nuclear material, activities and facilities in that State. The Agency sought clarification of those matters through the State authorities. The Government of Egypt cooperated with the Agency providing information and access. At the end of 2004, the Agency was still in the process of verifying whether Egypt's declarations were correct and complete.

Iraq

Since mid-March 2003, the Agency has been unable to implement its mandate in Iraq under the relevant Security Council resolutions12 which remained valid. Security Council resolution 1546 adopted in 2004, however reaffirmed the Council's intention to revisit the Agency's mandate in Iraq.
Throughout 2004, the Agency continued to consolidate, restructure and further analyze information collected about Iraq since 1991.13 The Agency remained concerned about the widespread and apparently systematic dismantlement of sites previously relevant to Iraq's nuclear programme that had been subject to ongoing monitoring and verification by the Agency. In June 2004, the United States Government informed the Agency that, with the consent of the interim Iraqi Government, it had removed most of the nuclear material from Iraq under Agency safeguards stored at the Tuwaitha complex, along with approximately one thousand high-intensity radioactive sources.
In August, pursuant to Iraq's NPT safeguards agreement, the Agency carried out an annual physical inventory verification of the remaining nuclear material in Iraq (located at Location C, Tuwaitha) consisting of natural and low enriched uranium. It also verified the records detailing the transfer from Iraq of the nuclear material referred to above.
In October, the Agency received information from the interim Iraqi Government about the disappearance of 342 tonnes of the high explosives HMX, RDX and PETN14 kept under Agency seal. The Agency promptly informed the Security Council of this development. The Agency remained ready to resume its verification activities in Iraq pursuant to its mandates under Iraq's NPT safeguards agreement and relevant Security Council resolutions, once the security situation in Iraq had improved and it was allowed access.

1 See: http://www.iaea.org/OurWork/SV/Safeguards/sv.html.
2See http://www.iaea.org/OurWork/SV/Safeguards/sg_actionplan2005.
3Integrated safeguards describe the optimum combination of all safeguards measures available to the Agency under comprehensive safeguards agreements and additional protocols. A prerequisite for the implementation of integrated safeguards is a broader safeguards conclusion drawn by the Agency for the respective State. Once implemented, the combination of measures enables maximum effectiveness and efficiency of safeguards measures.
4See http://www.iaea.org/Publications/Reports/Anrep2003/table_A23.
5Ibid., table A22.
6See http://www.iaea.org/NewsCenter/News/2005/fuelcycle.html.
7See http://www.iaea.org/NewsCenter/Focus/IaeaDprk/index.shtml.
8See http://www.iaea.org/NewsCenter/Focus/IaeaIran/index.shtml.
9See http://www.iaea.org/NewsCenter/Focus/IaeaLibya/index.shtml.
10 The full report is available from http://www.iaea.org/Publications/ Documents/Board/2004/gov2004-18.pdf.
11See http://www. iaea. org/ News Center/ PressReleases/2004/prn200408, also available from http://www.iaea.org/NewsCenter/News/2004/south_korea.
12See http://www.iaea.org/OurWork/SV/Invo/index.html.
13See http://www.iaea.org/NewsCenter/Focus/IaeaIraq/index.shtml.
14See glossary, Appendix XII of this volume.