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IAEA Iran Probe Winding Down; Dispute With U.S., EU Countries

Paul Kerr

In advance of a meeting beginning Sept. 13, International Atomic Energy Agency (IAEA) Director-General Mohamed ElBaradei is to present the agency’s Board of Governors with a report describing progress in the two-year investigation of Iran’s nuclear programs.

In contrast to several past reports, ElBaradei will not reveal any undisclosed Iranian nuclear activities, a diplomat close to the Vienna-based agency told Arms Control Today Aug. 20. The report will resolve, or nearly resolve, most outstanding issues that the agency has been called upon to investigate with regard to Iran’s nuclear activities, the source added.

However, the meeting is unlikely to resolve the controversy surrounding Iran’s nuclear activities or diminish U.S. pressure on Tehran to give up its nuclear program. Questions regarding Iran’s nuclear intentions remain, and Tehran has not taken most actions the board called for in a June resolution, the latest of several that have criticized Iran’s lack of cooperation with the IAEA. (See ACT, July/August 2004.)

IAEA Investigates

In particular, the June resolution emphasized concerns about Iran’s uranium-enrichment activities, especially questions concerning its advanced centrifuge program and the IAEA’s previously reported discovery of enriched uranium at several locations in the country. Gas centrifuges can produce civilian nuclear reactor fuel as well as highly enriched uranium for use in nuclear weapons.

Iran’s clandestine centrifuge program has sparked concern that it has a secret nuclear weapons program. Countries party to the nuclear Nonproliferation Treaty (NPT) are permitted to enrich uranium, but they must do so under IAEA safeguards agreements. These accords empower the IAEA to ensure nuclear facilities are used solely for civilian purposes. Iran covertly tested some of its centrifuges with nuclear material—a violation of its agreement.

The resolution called on Iran to implement fully its October 2003 pledge to suspend its uranium-enrichment program, a pledge that was part of an agreement with France, Germany, and the United Kingdom. (See ACT, November 2003.) However, irritated by the Europeans’ support for the June resolution, Iran stated later that month that it would resume making centrifuge components and assembling centrifuges.

Iranian Foreign Minister Kamal Kharazi told reporters July 31 that Tehran had started building centrifuges, Reuters reported. Iran’s centrifuge work is taking place under IAEA supervision, Iran’s ambassador to the United Nations Mohammad Javad Zarif told the Financial Times Aug. 9. Iran has not resumed actual uranium enrichment.

Such activity has caused controversy before. Iran continued to manufacture components and assemble centrifuges even after it suspended activities at its other enrichment facilities late last year. Iran agreed in February to stop both component manufacturing and centrifuge assembly, but ElBaradei reported in June that Iran had not stopped manufacturing components. (See ACT, March 2004.)

The resolution also called on Iran to refrain from producing uranium hexafluoride—the feedstock for gas centrifuges—in its uranium conversion facility. Iran told the agency it would begin testing the facility in May, but the Vienna diplomat said Iran has not yet done so.

The board further called on Iran to “voluntarily…reconsider its decision to start construction” of a heavy-water nuclear reactor. Iran was supposed to start construction in June but has not yet done so, a Department of State official said Aug. 27. The United States views this reactor as a proliferation concern, arguing that it is well suited for producing plutonium, which also can be used in nuclear weapons.

As for the enriched uranium particles that the IAEA reported earlier this year, the agency’s investigation has apparently made progress. Iran claims that the particles originated from imported centrifuge components, but previous IAEA reports have questioned that explanation. This uncertainty suggested that Iran had either obtained or produced enriched uranium that it did not report. However, the Vienna diplomatic source stated that, despite these earlier reports, the imported components can probably account for all of the particles in question, but cautioned that this will not be confirmed for some time.

Specifically, the source confirmed press reports that uranium enriched to 54 percent U-235 came from centrifuges imported from Pakistan. Uranium particles enriched to 36 percent U-235 apparently came from equipment originating in the former Soviet Union and reaching Iran via China and Pakistan. Iran’s use of a network run by former Pakistani nuclear weapons official Abdul Qadeer Khan to acquire materials for its centrifuge program has been known for some time. (See ACT, March 2004.)

This, however, does not explain other outstanding issues such as Tehran’s experiments with polonium, an element with limited civilian uses that can be used to trigger a chain reaction in a nuclear weapon.

The IAEA also is investigating allegations that Iran tried to cover up undisclosed nuclear activities by demolishing buildings located at a site called Lavizan Shian. Despite the fact that satellite images appeared to show that Iran razed buildings and scraped topsoil from the site, there is no evidence that Iran removed the soil or undertook prohibited nuclear activities there, the Vienna source said. (See ACT, July/August 2004.)

The source also revealed that the IAEA has completed its preliminary assessment of Iran’s May declaration under the additional protocol to its safeguards agreement. As part of its October 2003 agreement, Iran agreed to sign an additional protocol and act as if it were in force until the Majlis (Iran’s parliament) ratifies it. The board urged Iran in June to ratify the protocol, but the Majlis has yet to do so.

Next Steps
Diplomatic efforts since the June meeting have failed to moderate Iran’s provocative behavior. A July 29 meeting between the European governments and Tehran failed to persuade Iran to stop its centrifuge activity. According to a European diplomat, Iran had agreed in October to an unwritten “understanding” to eventually dismantle its nuclear fuel facilities in return for a guaranteed external fuel supply. However, Iranian officials continue to insist that they will not accept such an arrangement, although Zarif indicated that Iran wished to “address the legitimate concerns” of the United States and the Europeans regarding its nuclear program.

A State Department official interviewed Aug. 17 said Washington believes that the European governments’ diplomacy “has run its course” and that more pressure needs to be applied to Tehran. The June resolution did not set a deadline for Tehran to cooperate or mandate any consequences to be imposed if it did not.

Undersecretary of State for Arms Control and International Security John Bolton conveyed a sense of urgency regarding Iran’s nuclear program to a Hudson Institute audience Aug. 17, asserting that, “[i]f we permit Iran’s deception to go on much longer...Iran will have nuclear weapons.” He added that Iran told its European interlocutors in July that it could “enrich enough uranium for nuclear weapons within a year.” Bolton told Reuters two days later that Iran further claimed “it could possess nuclear weapons within three years.” But foreign diplomats familiar with the meeting contradicted these reports.

Bolton also alluded to recent press reports suggesting that Iran is acquiring additional materials with possible nuclear weapons applications (see sidebar).

The current estimate for when Iran might acquire nuclear weapons is unclear. A February 2003 Defense Intelligence Agency estimate says Iran will have a nuclear bomb by 2010 if it acquires the necessary technology and fissile material. Israeli intelligence estimates that Iran will be able to develop a nuclear weapon by 2007, according to July press reports.

The Bush administration has not yet decided whether to try and persuade the board to find Iran in noncompliance with its safeguards agreement at the September meeting. Such a finding requires the board to refer the matter to the UN Security Council, which may then take measures, including economic sanctions, against Tehran. The United States failed to persuade the board to adopt such a stance in a November 2003 resolution and has not attempted to do so since.

The official acknowledged that the tone of ElBaradei’s report will play a large factor in determining whether Washington will be able to get a noncompliance finding. “We have our work cut out for us,” the official said, adding that the European governments are still deciding on their position.

Kharazi said on state television that Iran wants the board to resolve the issues concerning its nuclear program at the upcoming meeting, Agence France Presse reported Aug. 19. Zarif said that Iran may not follow through on its commitment to ratify the additional protocol if the matter is referred to the Security Council.

Bushehr Delay
Meanwhile, Assadollah Sabouri, deputy head of the Iranian Atomic Energy Organization, announced Aug. 22 that Iran’s nuclear reactor under construction near the city of Bushehr will not begin operating until 2006, Agence France Presse reported. This marked yet another delay from its scheduled 2003 beginning date.

Sabouri also stated that Iran will begin using domestically produced nuclear fuel for its reactors after a 10-year fuel-supply agreement with Russia ends. Moscow is building the reactor and has agreed to supply fuel for it. Russia promised the United States that it would take back the reactor’s spent fuel to prevent Iran from extracting plutonium from it. The agreement is not yet concluded, and Russia has refused to send nuclear fuel to Iran until it is.

The announcement that Iran eventually plans to provide its own fuel for the Bushehr reactor could exacerbate U.S. concerns. Bolton stated Aug. 17 that the reactor “would produce enough plutonium each year for about 30 nuclear weapons.”

Steps to Developing a Nuclear Weapon: The Uranium Route

Paul Kerr

Along with plutonium, highly enriched uranium (HEU) is one of two key materials that can be used as the explosive material in nuclear weapons. For two years, the International Atomic Energy Agency (IAEA) has been probing Iran’s covert use of uranium enrichment technologies to determine whether Tehran has a secret program to build nuclear weapons in violation of the nuclear Nonproliferation Treaty (NPT).

Enrichment is the process of increasing the concentration of the uranium-235 isotope, which fissions far more readily than the more common uranium-238 isotope. Natural uranium is only 0.7 percent uranium-235. Uranium that contains uranium-235 (low-enriched uranium) is used as fuel in power reactors.

But the same technologies that produce weapons-grade uranium, also can produce low-enriched uranium for civilian nuclear power plants, complicating the IAEA’s task.

In July, new information emerged suggesting that Iran is attempting to develop nuclear weapons. Western diplomatic sources, as well as a U.S. official, confirmed press accounts of intelligence describing Iranian attempts to purchase deuterium (or heavy water) and high-speed electronic switches. Both are dual-use materials, which can be used to produce a more advanced nuclear weapon. Undersecretary of State John Bolton stated Aug. 17 that the United States wants the IAEA to investigate these “procurement attempts.”

Step 1 Mine and process uranium

• Iranian President Mohammad Khatami announced Feb. 9, 2003 that Iran had started mining uranium near the city of Yazd.

Step 2 Convert uranium oxide into uranium hexafluoride for enrichment

• On March 3, 2003 Secretary of the Supreme National Security Council Rowhani declared Iran’s uranium conversion facility operational.
• A June 6, 2003 report from IAEA Director-General Mohamed ElBaradei revealed that Iran had imported uranium compounds such as uranium hexafluoride, uranium tetrafluoride, and uranium dioxide in 1991.
• ElBaradei presented a report Aug. 26, 2003, which included Iran’s admission that it had conducted uranium conversion experiments in the early 1990’s.
• Iran informed the IAEA April 29 that it would begin “hot tests” of the facility’s uranium hexafluoride production line beginning May 6, but there is no public indication that it has done so.

Step 3 Enrich Uranium

Gas Centrifuges: Precision rotors containing uranium hexafluoride gas spin at very high speeds. Heavier isotopes concentrate toward the wall of the rotor, where they can be removed.

• During a Feb. 21-22, 2003 visit, ElBaradei reportedly expressed surprise at the progress of the Iranian gas centrifuge facility. Iran was operating a small pilot facility with more than 160 centrifuges and planning to install up to 50,000 centrifuges at a commercial facility located at the same site. Iran suspended work at the site last December after agreeing to do so in October 2003.
• The subsequent IAEA investigation revealed that Iran had covertly tested centrifuges with nuclear material. Under
the NPT, states are permitted to possess enrichment facilities, but they must allow the IAEA to monitor their operation. Iran publicly tested a single centrifuge June 25, 2003 and began to test 10 more centrifuges two months later. On Feb. 24, 2004 ElBaradei stated that Iran had continued to manufacture centrifuge parts and assemble entire centrifuges. Iran agreed in February to suspend this activity, but it never entirely stopped manufacturing components. Tehran then announced June 24, 2004 that it would resume making components and assembling centrifuges.
• ElBaradei also revealed in February that Iran had conducted research and development on a centrifuge more advanced than the type it had disclosed to the IAEA. He further reported June 1 that a private Iranian company had made inquiries about procuring components for thousands of centrifuges.

Laser Enrichment: Laser-based enrichment technologies utilize small differences in light frequencies to ionize lighter uranium-235 from heavier uranium-238. The weapons-grade atoms are then collected on a negatively charged plate.

• In late October 2003, Iranian officials admitted to pursuing and making significant progress on laser technology but said it no longer has operating laser enrichment facilities.

Step 4 Bomb design and development, computer simulation, and non-nuclear high-explosive testing

• Intelligence reports described in July press accounts indicate that Iran has attempted to obtain high-speed electronic switches, although it is unclear when these attempts took place or whether Tehran is still attempting to do so. Such switches are used to ensure that conventional high explosives in implosion weapons detonate simultaneously.
• The February 2004 report from ElBaradei stated that Iran had conducted experiments with polonium, which can be used as a neutron initiator to trigger a nuclear chain reaction.
• Intelligence reports also indicate that Iran is attempting to acquire deuterium from Russia. Deuterium, along with tritium, is used as the “boost gas” in a certain type of nuclear weapon. Additionally, deuterium and tritium are used as neutron initiators in modern nuclear weapons. The boost gas greatly increases the yield of a given amount of fissile material. Deuterium also can be used as a moderator in heavy-water nuclear reactors (heavy water is another name for deuterium). Iran has said it is constructing such a reactor, along with a heavy-water plant.

Step 5 Fabricate highly enriched uranium into a bomb core or “pit,” and assemble the weapon

• No evidence.

Possible Step Nuclear testing.*

• No evidence.

* HEU can be used to make two fundamentally different types of weapons: gun-type weapons and implosion weapons. Gun-type weapons (such as the “Little Boy” bomb used in the 1945 attack on Hiroshima, Japan ) require more HEU, but are far simpler to design and build. Such weapons require neither a neutron trigger, nor high-explosive testing or assemblies. These weapons also allow manufacturers very high confidence that the devices will explode, even without testing. Implosion weapons use one-third as much HEU (or less), but are much more difficult to design and build.

IAEA Report Questions Iran's Nuclear Programs

By Paul Kerr

International Atomic Energy Agency (IAEA) Director-General Mohamed ElBaradei provided an update on the agency’s investigation of Iran’s nuclear programs in a June 1 report to the IAEA Board of Governors.

According to the report, the most important outstanding issues concerning these programs have yet to be resolved, partly because Iran delayed until April the IAEA inspections that were scheduled for March. The delay meant that environmental samples could not be taken and analyzed in time for the board’s most recent meeting, which began June 14.

Last October, Tehran gave the IAEA what it claimed was a complete declaration of its nuclear programs, but a February report from ElBaradei stated that the agency’s subsequent investigation revealed the declaration to be incomplete.

Uranium Enrichment

Gas Centrifuge Program

The IAEA reports that several major issues concerning Tehran’s gas centrifuge uranium-enrichment program still need to be resolved. The program began in 1985 and now consists of a small pilot facility at Natanz, as well as a larger commercial facility at the same site. Uranium-enrichment facilities can produce fissile material for nuclear weapons, as well as fuel for civilian nuclear reactors. Iran was operating the pilot facility and planning to install up to 50,000 centrifuges at the commercial facility, but suspended work at the site last December after agreeing to do so in October 2003.

The agency is still investigating the source of enriched uranium particles found at several locations in Iran. This “contamination” has caused concern because it suggests that Iran may have conducted nuclear activities that it has not yet admitted to and may be concealing nuclear material it either produced or imported.

Iran has admitted to testing centrifuges with nuclear material at a facility called the Kalaye Electric Company without first informing the IAEA, a violation of its safeguards agreement with the agency. However, Tehran has said it produced only uranium enriched to a very low degree and has attributed the IAEA’s discovery of other types of enriched uranium particles to contamination from centrifuge components obtained from a procurement network run by Pakistani scientist Abdul Qadeer Khan. Iranian officials maintain that they do not know the components’ origin, but a February report from Malaysia’s Inspector General of Police states that used centrifuges were sent from Pakistan to Iran via the United Arab Emirates during the mid-1990s.

ElBaradei reported in February that Iran’s domestically manufactured components have been contaminated with a different type of enriched uranium than their imported equivalents. Furthermore, environmental samples taken at the Kalaye facility and another site called Farayand Technique indicate the presence of 36 percent enriched uranium—material Iran has not declared to the IAEA and which probably did not come from imported components.

IAEA and Department of State officials told Arms Control Today that such uranium has been used in Soviet-designed research reactors, and as fuel for nuclear-powered submarines. Uranium enriched to this level would probably not be used in nuclear weapons.

The IAEA is also trying to determine the source of uranium hexafluoride contamination found in a storage facility located at the Tehran Research Reactor. Uranium hexafluoride is the feedstock for centrifuges. The IAEA’s discovery, first reported in June 2003, that uranium hexafluoride was missing from cylinders imported in 1991 raised suspicions that Iran had tested centrifuges with it—a suspicion that proved correct. Before it admitted to the testing, Iran had said the material leaked from the cylinders, but this admission still left unexplained the contamination in the storage facility.

Tehran now admits that it stored “bottles containing [uranium hexafluoride] from domestic [research and development] conversion activities,” but insists that this material leaked from the bottles. IAEA experts do not “consider this explanation credible.” Iran has admitted to conducting uranium-conversion experiments and has a facility that can convert uranium oxide to uranium hexafluoride. (See ACT, December 2003.)

Additionally, the agency is in the process of determining the scope of Iran’s research and development into a centrifuge based on a common design known as the “P-2,” which is more advanced than the type installed in the Natanz facility. Libya also acquired from the Khan network centrifuges based on this design called the “L-2.” This part of the investigation has been particularly contentious because Iran failed to declare this work to the agency in October. ElBaradei reported in February that Iran had told the agency that it had not received any centrifuge components from foreign sources.

Iran has now admitted, however, to acquiring magnets for the centrifuges “from Asian suppliers” and has also disclosed that a private Iranian company made inquiries about procuring 4,000 magnets “suitable for use” in the advanced centrifuges. Moreover, IAEA Deputy Director-General Pierre Goldschmidt stated June 17 that the agency has “indications” that Iran “had shown interest in acquiring up to 100,000” additional magnets. The new procurement information “bring[s] into question previous statements by Iran that the P-2 programme was research and development,” Goldschmidt added.

Furthermore, Tehran has stated that a key component for the P-2 centrifuges was manufactured in a facility associated with Iran’s Ministry of Defense, contradicting Iran’s previous assertion that the components were manufactured at a private workshop. This revelation perhaps suggests that Iran’s nuclear program is for military purposes.

The report also casts doubt on Iran’s account of the pace of its P-2 centrifuge work. Iran contends that it obtained the designs in 1995 from a foreign source but did not begin work until 2001. IAEA experts, however, believe that Iran’s program is too advanced for this time frame to be accurate. The report adds that Iran received the designs from the same source Libya used to obtain designs for its recently ended centrifuge program, but does not explicitly name the Khan network. (See ACT, March 2004.)

Laser Enrichment

Iran told the IAEA in October that it had been pursuing a laser-based uranium-enrichment program since 1991, but ElBaradei’s June report indicates that Iran understated the enrichment capabilities of its laser equipment.

Suspension of Enrichment Activities

Despite an October pledge to suspend its enrichment activities, Iran continued to assemble centrifuges until mid-January and manufacture centrifuge components until February, claiming that such activities were consistent with its agreement.

At that point, Iran told the IAEA that, beginning the following month, it would suspend its assembling and testing of centrifuges, as well as the manufacture of related components. However, despite Iran’s claim that manufacturing had stopped in early April, three private companies are continuing to build components.

The report cautions that “[s]ome of the activities subject to suspension, such as component production, are inherently difficult to verify,” adding that the IAEA “cannot provide any assurance” that components are not being produced at sites Iran has not identified to the IAEA.

Iran has provided IAEA inspectors access to facilities they wish to inspect, the report says, but Tehran’s discussions with the agency regarding the details of inspections at military sites delayed visits to workshops at those sites. Inspectors had visited two of the three military sites in question as of June 1.

Moreover, Iran has also announced that it plans to produce uranium hexafluoride in its uranium-conversion facility. Iran says it is only testing the facility, but the IAEA has told Iran that the amount of material it plans to use qualifies the so-called testing as “production of feed material for enrichment processes,” an activity that the report says is “at variance with the [a]gency’s previous understanding of Iran’s decision.” Although Iran told the IAEA that it would begin the tests May 6, it had not done so as of May 21.

Tehran has not undertaken any activities at either its laser facility or the Natanz facility, the report says.

Other Concerns


The IAEA is also concerned about Iran separating spent reactor fuel. Such separation is needed before spent nuclear fuel can be reprocessed. Reprocessed fuel can be used to produce plutonium, another explosive material for nuclear weapons.

According to the report, Iran “understated” the amount of plutonium it secretly separated from spent fuel produced in a research reactor in Tehran, although “the amounts produced were only in the milligram range.” In addition, the report suggests that these separation experiments, which the IAEA first reported in November, occurred more recently than Iran had previously declared.

Concern about reprocessing has grown as Iran has nearly completed a light-water reactor (LWR) and announced earlier this year that it would start building a heavy-water reactor in June. (See ACT, May 2004.)

Iran claims the heavy-water reactor is for producing isotopes for civilian purposes, but the report states that Iran was attempting to procure hot cells—facilities used in isotope production that can also be used in reprocessing spent nuclear reactor fuel—with a “wall thickness…more indicative of that required for handling spent fuel.” Iran now says it no longer plans to build hot cells.


The IAEA is continuing to investigate Iran’s production of polonium, a radioisotope that has limited civilian applications but can also be used to trigger a nuclear chain reaction in certain types of nuclear weapons. Iran continues to maintain that it produced the substance for possible use in batteries, but agency investigators regard this explanation as thinly documented and “not entirely adequate,” the report says

ElBaradei reported in February that Tehran had told the IAEA three months earlier that it had produced polonium.

Satellite Photos Show Possible Nuclear Site in Iran

Iran has demolished buildings at the Lavizan Shian site located in Tehran and removed a layer of topsoil, according to commercial satellite images obtained by a U.S. nongovernmental organization. The disclosure led U.S. officials to suggest that Iran has not yet disclosed all facilities and activities associated with its nuclear programs.

The Institute for Science and International Security (ISIS) provided the images to ABC News, which first aired the story June 16. The site was intact in an August 2003 picture, but images from March and May of this year revealed that the buildings were razed and the earth removed.

The revelations were particularly controversial because they came as the International Atomic Energy Agency (IAEA) was formulating a June 18 resolution condemning Iran’s failure to disclose all information relevant to its nuclear programs.

Department of State spokesperson Richard Boucher told reporters June 17 that this new evidence “raises serious concerns and fits a pattern…that we’ve seen from Iran of trying to cover up on its activities, including by trying to sanitize locations which the IAEA should be allowed to visit and inspect.” Iran previously altered the interior of a building located at the Kalaye Electric Company in an apparent attempt to thwart IAEA inspection efforts. Despite this attempt, the IAEA managed to obtain detailed data indicating that Iran conducted secret nuclear activities there. (See ACT, September 2003.)

IAEA Director-General Mohamed ElBaradei told Agence France Presse June 28 that agency inspectors had visited Lavizan Shian site that day and had taken environmental samples.

U.S. officials have repeatedly charged Iran with pursuing nuclear weapons, but Iran claims its nuclear programs are entirely peaceful.





IAEA Report Questions Iran's Nuclear Programs

Global Nuclear Agency Rebukes Iran

Paul Kerr

The International Atomic Energy Agency (IAEA) Board of Governors adopted a resolution June 18 condemning Iran for failing to cooperate fully with the agency’s investigation of its nuclear programs. Iran retaliated by announcing that it would not fulfill one of its previous commitments to suspend work on its uranium-enrichment program.

The IAEA resolution, which followed a critical June 1 report from IAEA Director-General Mohamed ElBaradei (see page 26), “deplores” Iran’s failure to provide the agency with “full, timely and proactive” cooperation. Specifically, the resolution pointed to Iran’s decision to delay an IAEA inspection scheduled for March until the following month—a delay that meant environmental samples from Iran’s nuclear facilities could not be analyzed in time for the board meeting.

The resolution also urged Iran to take additional steps to “intensify its cooperation” with the IAEA, especially in resolving questions concerning its advanced gas-centrifuge program and the presence of enriched uranium at several locations associated with its nuclear programs. Gas centrifuges are used to produce low-enriched uranium for use in nuclear reactors, but they may also produce highly enriched uranium for use as the explosive material in a nuclear weapon.

Further, the resolution once more called on Iran to implement fully its pledge to suspend its uranium-enrichment activities, which Tehran promised to do last October as part of an agreement with France, Germany, and the United Kingdom. The IAEA board’s last two resolutions urged Iran to abide by the agreement. (See ACT, November 2003.)

According to ElBaradei’s report, Iran had not stopped all manufacturing of centrifuge components and was planning to produce feedstock for centrifuges in its uranium-conversion facility. The June resolution specifically called on Iran to cease both activities and allow the agency to “verify fully” that Iran has done so.

Two-Year Investigation

Iran responded by sending a letter to the United Kingdom, France, and Germany June 24 stating that it would resume assembling centrifuges and manufacturing related components on June 29, a European diplomat said.

In an investigation that began nearly two years ago, IAEA investigators have found that Iran has carried out a number of covert nuclear activities, some of which violated its IAEA safeguards agreement. Safeguards agreements empower the IAEA to monitor nuclear Nonproliferation Treaty members’ nuclear facilities to ensure that they are used solely for civilian purposes.

In its October agreement, Iran promised to cooperate fully with the IAEA’s investigation. Tehran then provided the IAEA with what it said was a complete account of its nuclear activities. The next month, the board adopted a resolution welcoming this decision, but the agency has since learned that Iran was not fully forthcoming about all of its nuclear activities. These revelations led the board to adopt another resolution in March calling on Iran to accelerate its cooperation with the IAEA.

The June resolution addresses additional issues regarding Iran’s nuclear programs, calling on Iran “to reconsider” its construction of a heavy-water nuclear reactor as well as “production testing” at its uranium-conversion facility. The heavy water plant is controversial because U.S. officials fear the reactor might be part of a nuclear weapons program. (See ACT, May 2004.)

The IAEA resolution also calls on Iran to ratify an additional protocol to its IAEA safeguards agreement “without delay.” Tehran signed an additional protocol in December 2003 and has agreed to act as if it were in force, but the Majlis (Iran’s parliament) has not yet ratified it. Tehran submitted an expanded declaration of its nuclear activities May 21, as the protocol requires. The IAEA must still verify the declaration. Additional protocols augment the IAEA’s authority to detect clandestine nuclear activities.

France, Germany, and the United Kingdom took the lead in drafting the resolution while working closely with the United States. A Department of State official and a European diplomat both told Arms Control Today that the drafting process was less contentious than in November or March when the United States had pushed for stronger language condemning Iran’s actions. This time, Washington worked more cooperatively with the Europeans, having “learned a lesson,” the State Department official said.

Still, the resolution was “not perfect,” the U.S. official added. Washington had wanted the resolution to include a deadline for full Iranian cooperation, as well as a “trigger mechanism” for the board to take action if Iran does not fulfill its commitments. The Europeans, however, rejected that approach.

The United States has repeatedly said that Iran has a nuclear weapons program, a charge Iran denies. U.S. ambassador to the IAEA Kenneth Brill asserted June 18 that Iran has a “concealed set of activities related to a military program.” ElBaradei, however, stated June 1 that “the jury is still out” on whether Iran is pursuing nuclear weapons, Reuters reported.

Iran’s Reaction

According to the European diplomat, the June 24 letter linked Tehran’s reaction to the current resolution’s provisions concerning Iran’s uranium-conversion facility and heavy-water reactor.

Iran’s Foreign Ministry spokesperson Hamid Reza Asefi provided an additional explanation to reporters June 27. According to Agence France Presse, Asefi stated that Iran’s decision was a response to the European governments’ failure to follow through on a February agreement to “close our case at the IAEA” in June. Iranian officials had repeatedly expressed hope that the IAEA’s investigation would be concluded after the June meeting.

Two European diplomats, however, contradicted Iran’s claim, saying that such an agreement does not exist and would be impossible because any member of the IAEA board may raise any issue anytime they wish.

Iran’s compliance with the suspension agreement has been problematic from the start. Iran continued to manufacture centrifuge parts and assemble entire centrifuges even after suspending work at its enrichment facilities. Tehran had reluctantly agreed only in February to stop these activities as well, but it has not entirely done so.

A European diplomat told Arms Control Today June 25 that in October Iran had agreed to an unwritten “understanding” to eventually dismantle its nuclear fuel facilities in return for a guaranteed external supply of nuclear fuel. Tehran, however, has repeatedly emphasized the “voluntary” nature of the suspension agreement and said that it has the right to enrich uranium.

The European Union and the United States “urge[d] Iran to rethink its decision” in a June 26 joint statement, and Iran appeared to be leaving itself some diplomatic flexibility. Secretary of the Supreme National Security Council Hassan Rowhani told reporters June 27 that Iran would continue cooperating with the IAEA and would like to “hold comprehensive negotiations…with representatives” from London, Paris, and Berlin. Rowhani told the Majlis the same day that “any future decision in this regard [to uranium enrichment] would depend on the prevailing conditions,” the official Islamic Republic News Agency (IRNA) reported.

Iranian officials also indicated resistance to other elements of the resolution. For instance, Majlis Speaker Gholam Ali Haddad Adel stated that the Majlis will not ratify an additional protocol if it is not in Iran’s “national interests,” IRNA reported June 15. Additionally, Asefi told reporters June 20 that Iran will not stop its heavy-water reactor or uranium-conversion projects.

Next Steps

The board is scheduled to meet in September, but it is unclear what it will do if Iran continues its lack of cooperation. The current IAEA resolution neither specifies a deadline for Tehran to cooperate, nor mandates any explicit consequences if it does not.

At the June 14 board meeting, ElBaradei urged Iran’s “prompt cooperation,” arguing that “[i]t is essential for the integrity and credibility of the inspection process that we are able to bring these issues to a close within the next few months.”

The State Department official said Washington is still debating whether to urge the IAEA board to find Iran in noncompliance with its safeguards agreement at its upcoming meeting. Such a finding requires the board to refer the matter to the UN Security Council. The United States failed to persuade the board to adopt such a stance in its November resolution and has not attempted to do so since.

White House Press Secretary Scott McClellan told reporters June 27 that the board should “seriously consider” referring the matter to the Security Council but did not mention a deadline. The State Department official said some U.S. officials want to wait until the board’s November meeting to urge a Security Council referral.

Although the council could take action against Iran, including imposing economic sanctions, it is far from clear that it will do so. The board referred North Korea to the Security Council in February 2003, but no action has been taken.

Even so, the State Department official argued that a referral could be valuable because it would “raise the profile” of Iran’s intransigence and provide “another lever” to induce Iran to cooperate.





Statement Regarding the Report of the International Atomic Energy Agency on Its Investigation of Iran's Nuclear Program



Statement by Daryl Kimball, Executive Director

For Immediate Release: June 15, 2004

Press Contacts: Paul Kerr, Nonproliferation Analyst, (202) 463-8270 x102; Daryl Kimball, Executive Director, (202) 463-8270 x105

(Washington, D.C.): The report by the Director-General of the International Atomic Energy Agency makes it clear that leaders in Tehran must go further to explain the details and ultimate purpose of Iran's nuclear program and should do so without further delay. Russia, Pakistan, and other states involved in nuclear trade with Tehran should fully cooperate with the IAEA's ongoing efforts to get a complete picture of the Iranian nuclear program.

Over the last two years, the IAEA has uncovered evidence that Iran is now closer to a nuclear weapons-making capability than previously believed. An IAEA investigation and inspections in early 2003 led the agency to report Nov. 10, 2003 that Iran had for many years pursued nuclear activities in violation of its nuclear Nonproliferation Treaty (NPT) obligations. The latest report from the IAEA makes it clear that while Iran has sometimes grudgingly granted the IAEA access to the sites and facilities in question, a number of key issues regarding Iran's nuclear activities need to be clarified. The report finds that Iran has stopped uranium enrichment as it pledged last fall, but that it has continued to seek parts for such activities.

Leaders in Tehran should maintain their suspension of uranium enrichment activities and refrain from other projects that have military applications until international concerns about its nuclear program are resolved. Iran is legally permitted under the NPT to enrich uranium for peaceful purposes but this process can also be used to develop nuclear weapons.
Even with greater transparency under the Additional Protocol, which Iran signed last year and which allows more intrusive IAEA inspections, it is still possible that Iran might someday decide to withdraw from the NPT and pursue nuclear weapons.

In the long run, turning Iran away from nuclear weapons will require a new and more sophisticated joint U.S.-European-Russian strategy to reduce Iran's incentives to acquire nuclear weapons and increase the benefits of openness and compliance. An important element of such a strategy would be for the United States and Israel to reassure Tehran that it does not have to fear an attack by either country if Iran drops its pursuit of nuclear weapons, ends its support of terrorism, and stops threatening the existence of Israel.

The United States should also make clear that it does not support the possession of nuclear weapons by other countries, including Israel, India, and Pakistan, which are not party to the NPT. To avoid the perils of nuclear weapons, all states must comply with global rules against the development and possession of nuclear weapons. Leaders in Tehran cannot be allowed to justify their nuclear weapons ambitions by pointing to the nuclear bomb arsenals and activities of other countries.

Nevertheless, it is ultimately up to Iran to abide by its commitments not to develop nuclear weapons. Tehran should not use the behavior of others as a pretext for activities that go against its own security interests and threaten its neighbors. As Ali Akbar Salehi, Iran's former envoy to the IAEA, wisely noted in an interview June 9, acquiring nuclear weapons will not improve Iran's prestige and cannot buy more security, but only invite more dangers to Iran and the region.

# # #

The Arms Control Association is an independent, nonprofit membership organization dedicated to promoting public understanding of and support for effective arms control policies to address security threats posed by nuclear, chemical, and biological weapons, as well as conventional arms.

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Iran, IAEA Still Far Apart on Nuclear Program

Paul Kerr

A June 14 meeting of the International Atomic Energy Agency (IAEA) Board of Governors is unlikely to end the controversy over Iran’s nuclear programs, despite a “joint action plan” agreed to by both sides in April and Iran’s recent statements that it wants the meeting to resolve the matter.

Iranian Foreign Minister Kamal Kharazi said May 8 that Iran and the IAEA should resolve outstanding issues between them so that a “final solution” can be reached at the meeting.

But IAEA Director-General Mohamed ElBaradei, who is preparing a final report for the board on whether Iran has followed through on its safeguards agreement with the agency, told CNN May 16 that “the jury is still out” on whether Iran’s nuclear programs are “exclusively for peaceful purposes” and that Iran should be “more forthcoming” in cooperating with the IAEA’s ongoing investigation. (See ACT, May 2004.)

Under the joint action plan reached between Iran and the IAEA, Iran pledged to provide the agency with detailed information about its gas centrifuge-based uranium-enrichment program by the end of April and to deliver by mid-May a declaration required by the additional protocol to its IAEA safeguards agreement. Tehran has submitted the former but not the latter, Iranian Foreign Ministry spokesperson Hamid-Reza Assefi told reporters May 16.

Safeguards agreements authorize the IAEA to verify that states-parties to the nuclear Nonproliferation Treaty (NPT) are not diverting civilian nuclear activities to military purposes. The additional protocol requires Iran to provide significantly more information about its nuclear activities to the IAEA than its original safeguards agreement and provides the agency with more authority to verify the declaration. Iran has signed the agreement and has pledged to act as if it were in force until it is approved by the Majlis, Iran’s parliament. (See ACT, January/February 2004.)

The April pledge was Iran’s most recent promise to cooperate with the IAEA, which has been investigating allegations made public in August 2002 that Iran was pursuing clandestine nuclear activities. The IAEA board has adopted several resolutions urging Iran to cooperate, most recently in March, and is still seeking Iran’s full cooperation in providing information about its nuclear programs.

As part of an October agreement with the United Kingdom, Germany, and France, Iran agreed to suspend activities related to its uranium-enrichment programs. Tehran announced that it had completed the suspension in April. Tehran also agreed in October to conclude an additional protocol and cooperate with the agency’s investigation.

Iran’s centrifuge programs have caused the most concern. Gas centrifuges have civilian uses, but can also produce highly enriched uranium for use in nuclear weapons.

After the board condemned Iran for violating its safeguards agreement by secretly testing centrifuges with nuclear material, agency inspectors found additional evidence suggesting that Iran has undertaken other undisclosed enrichment activities and conducted work on a more advanced type of centrifuge. (See ACT, March 2004.)

ElBaradei said in a May 14 speech at the Council on Foreign Relations that the agency does not yet have “proof” that Iran has “enriched uranium to the military level.”

Assistant Secretary of State John Wolf told Arms Control Today May 13 that “Iran is still moving in the direction of a nuclear weapons capability” and that the United States has “good reason” to believe Iran is not complying with its additional protocol (see page 14). Wolf did not elaborate, except to say that this belief is not based on intelligence information.

Further complicating the matter, ElBaradei’s report may not provide a complete picture of Iran’s nuclear activities because test results from samples taken from some inspected facilities may not be available in time for the report. Department of State officials have blamed the delay on Iran’s March decision to postpone a visit by IAEA inspectors. (See ACT, April 2004.)

Washington is still mulling over its strategy for the IAEA board meeting. A State Department official interviewed May 17 stated that the United States will “probably” want the board to adopt a resolution condemning Iran’s behavior. The U.S. position on the content of such a resolution will depend on the “detail and tone” of ElBaradei’s report, which will be influential in “shaping the views of other board members,” the State Department official said.

The United States has previously said the board should declare Iran in noncompliance with its safeguards agreement—a finding that requires the board to refer the matter to the UN Security Council. The United States has failed once to persuade the board to declare Iran in noncompliance.

Washington may instead encourage the IAEA board to say it “cannot verify” Iran’s suspension of its centrifuge program because of the country’s demonstrated ability to manufacture relevant components at various locations throughout the country, a State Department official said last month.

Wolf did not say what the United States wants the Security Council to do in the event Iran is referred for noncompliance, nor would he comment on a possible U.S. response in the event that the Security Council fails to act.





U.S. Punishes 13 Companies for Iran Deals

Wade Boese

A common Bush administration refrain is that foreign companies can either do business with the United States or “rogue regimes,” but not both. The United States underscored that message April 1 by imposing sanctions on 13 foreign companies for trading with Iran, while waiving penalties on six Russian companies which Washington says have mended their ways.

Sanctions were imposed on five companies from China, two from Macedonia, two from Russia, and one each from Belarus, North Korea, Taiwan, and the United Arab Emirates. The companies were said to have exported items that appear on international arms export control regime lists or that could aid Iran’s production of missiles or chemical, biological, or nuclear weapons. Tehran is currently under intense international scrutiny for illegal nuclear activities exposed last year.

A Department of State official told Arms Control Today April 22 that Iran is aggressively seeking imports for all of its covert weapons programs. Because there is no expectation that Iran will stop trying to procure such items, the official said the focus must be on cutting off supply.

The newly sanctioned companies, some of which have been sanctioned previously, are prohibited from doing business with or receiving aid, arms, or other defense goods from the U.S. government for a two-year period.

The action has drawn some reproofs from the targeted countries. Russia’s Ministry of Foreign Affairs announced April 3 that “Russia rejects the very principle of the imposition by one state of sanctions on some structures of other states.”

It is not apparent that any of the sanctioned companies have dealings with the U.S. government, but the Bush administration still views the penalties as valuable—an assessment amply illustrated by the fact that it has imposed proliferation sanctions nearly 80 times. In contrast, the Clinton administration averaged about eight sanctions per year, according to June 2003 congressional testimony by Undersecretary of State for Arms Control and International Security John Bolton.

U.S. officials insist that, even if a company has few ties with Washington, sanctions may shame another government to clamp down on companies under its control or dissuade other companies from doing business with the sanctioned party.

In a March 12 interview with Arms Control Today, Paula DeSutter, the assistant secretary of state for verification and compliance, said that sanctions “force countries into less effective acquisition routes.” She cited Libya’s problems with its former chemical weapons program as evidence. “When the equipment came and wasn’t what they needed, they really didn’t have a complaint mechanism,” DeSutter explained.





A common Bush administration refrain is that foreign companies can either do business with the United States or “rogue regimes,” but not both. The United States underscored that message April 1 by...

Iran and IAEA Agree on Action Plan; U.S., Europeans Not Satisfied

Paul Kerr

Iran and the International Atomic Energy Agency (IAEA) reached agreement in early April on an action plan to complete the agency’s investigation of Iran’s nuclear program. As a critical IAEA meeting approaches, however, Tehran’s simultaneous decision to move forward with two nuclear projects seems likely to perpetuate international suspicions that Tehran is pursuing a nuclear weapons capability.

After meeting with senior Iranian officials in Tehran April 6, IAEA Director-General Mohamed ElBaradei reached an “agreement on a joint action plan with a timetable to deal with outstanding issues regarding the verification of Iran’s nuclear program,” according to an IAEA press release. ElBaradei suggested April 6 that the plan “will hopefully pave the way for progress.” Among other steps, the plan calls for Iran to provide the IAEA with information about its centrifuge program by the end of April.

In May, ElBaradei is to present a report on Iran’s progress. The IAEA Board of Governors will consider the results in June during what is widely seen as a crucial meeting.

The agreement marked the latest attempt to put a satisfactory end to a nearly two-year-old investigation into Iran’s effort to acquire a nuclear fuel cycle. Last October, after months of hesitant cooperation, Iran struck a deal with Germany, France, and the United Kingdom in which it promised to cooperate with the IAEA’s investigation, sign an additional protocol to its existing safeguards agreement with the IAEA, and suspend uranium-enrichment work. That same month, Iran provided the agency with what was supposed to be a complete declaration of all its nuclear activities.

Both Iran’s declaration and the agency’s investigation provided enough information for the board to adopt a resolution the following month condemning Iran’s pursuit of undeclared nuclear activities in violation of its IAEA safeguards agreement. Such agreements commit states-parties to the nuclear Nonproliferation Treaty (NPT) to provide sufficient transparency in their nuclear activities to assure other member states that they are not diverting civilian nuclear activities to military purposes.

Moreover, a February report from ElBaradei said Iran omitted several nuclear activities from its October declaration. Prodded by this report, the board’s March resolution called on Iran “to resolve all outstanding [nuclear] issues.”

In particular, the resolution called on Iran to answer questions regarding traces of uranium found at two facilities associated with Iran’s gas centrifuge-based uranium-enrichment program; Iran’s experiments with a possible nuclear-weapon trigger; and the scope of Iran’s uranium-enrichment programs. (See ACT, March 2004.)

As part of the April action plan, Iran has agreed to provide the agency with “detailed information regarding aspects of its centrifuge program” by the end of April. Gas centrifuges can be used to produce highly enriched uranium for use in nuclear weapons, as well as low-enriched uranium for use in civilian nuclear reactors. NPT states-parties are permitted to own uranium-enrichment facilities without restraint, but they are only supposed to operate these facilities under a safeguards agreement with the IAEA, which monitors the use of the equipment. The board already condemned Iran in November 2003 for secretly testing centrifuges with nuclear material—a violation of its safeguards agreement.

In a step designed to ease these concerns, Iran agreed in April to further comply with a key provision in its October pledge to the Europeans: suspending its uranium-enrichment activities. Mohammad Saeedi, an official from Iran’s Atomic Energy Organization, told Reuters April 12 that Iran had stopped making centrifuge components 3 days before, thereby fulfilling a February pledge to the IAEA. ElBaradei’s February report stated that Iran had suspended work on its centrifuge facilities but had continued to assemble some individual centrifuges and manufacture related components.

This month, Iran is also set to provide the IAEA with a fuller declaration of its nuclear-related activities. This declaration will be Tehran’s first under its additional protocol to its IAEA safeguards agreement. The protocol requires Iran to declare significantly more nuclear-related activities than it would under its original safeguards agreement and provides the IAEA with more freedom to investigate any questions or inconsistencies. Since agreeing to conclude the protocol as part of its October deal with the Europeans, Iran has signed the agreement and has pledged to act as if it were in force until it is approved by the Majlis, Iran’s parliament. (See ACT, January/February 2004.)

Upcoming Controversy Likely

Iranian Vice President Gholamreza Aghazadeh, head of Iran’s Atomic Energy Organization, told reporters April 6 that “Iran strongly expects” its outstanding issues with the IAEA to be settled at the June board meeting. However, several recent Iranian actions seem likely to perpetuate controversy over its nuclear programs.

In particular, Iran’s March decision to postpone for about two weeks an IAEA inspection scheduled for that month may impede the board’s ability to render a definitive judgment about Iran’s programs. A Department of State official told Arms Control Today April 20 that the postponement not only led to a two-week delay in agency inspections of civilian nuclear-related sites but also caused a significant delay in inspections of military facilities. As a consequence, the official said, samples taken from these sites may not be ready in time for the June board meeting. IAEA spokesperson Melissa Fleming confirmed the next day that samples “taken during recent inspections might not be available” in time for the report.

Inspecting military sites is important to the IAEA’s investigation because seven of the 13 Iranian “workshops” involved in producing centrifuge components are located on military sites, according to a March 30 agency document. IAEA inspectors visited one military facility in January, agency officials said.

Two other decisions from Tehran also seem certain to raise questions about its nuclear intentions. The State Department official said that Iran announced it will start construction on a heavy-water nuclear reactor in June, terming the decision a “deeply troubling move.” Tehran had previously announced its plans to construct the reactor sometime in 2004 at Arak. (See ACT, December 2003.) U.S. officials fear the reactor might be part of a nuclear weapons program because it is too small to contribute significantly to a civilian energy program but could generate plutonium for reprocessing into fissile material. Iran claims the reactor is for producing isotopes for civilian purposes and that its size is appropriate for that purpose.

Tehran also caused a stir when, according to Agence France Presse, Aghazadeh announced March 28 on state television that Iran would begin “experimental production” in April at its uranium-conversion facility at Isfahan. The facility can convert uranium oxide into uranium hexafluoride—the feedstock for centrifuges. Iran announced the facility’s completion in March 2003.

This is not the first time that the Isfahan facility has been the subject of controversy. The IAEA board said in its November resolution that Iran violated its safeguards agreement by failing to report nuclear experiments at the facility, in much the same way it failed to report similar activity related to its uranium-enrichment program.

An Iranian Foreign Ministry spokesperson told reporters April 5 that Tehran only intends to produce uranium tetrafluoride—an intermediate step for producing uranium hexafluoride—at the facility, which IAEA inspectors visited in March. IAEA officials said that Iran had given prior notice to the agency that it would begin uranium conversion in March, adding that these “conversion activities” do not violate Iran’s October agreement to suspend its enrichment activities.

The State Department official said, however, that Washington believes Iran should be proscribed from conducting any conversion activities related to uranium hexafluoride production, including producing uranium tetrafluoride.

Iran’s European interlocutors also expressed their irritation at Tehran’s decision. On March 31, the British, French, and German governments stated that the “announcement sends the wrong signal about Iranian willingness to implement a suspension of nuclear enrichment-related activities.”

According to Agence France Presse, French President Jacques Chirac emphasized during an April 21 meeting with Iranian Foreign Minister Kamal Kharrazi that Tehran should continue to cooperate with the IAEA. A French Foreign Ministry spokesperson stressed April 20 that Iran needs to provide “confidence” that it is complying with its NPT obligations in order to receive cooperation on civilian nuclear power—another component of the October agreement.

U.S. officials have been dismissive of Tehran’s claims of cooperation and have argued that Iran is likely trying to hide aspects of its centrifuge and other nuclear programs, a charge Tehran has repeatedly denied.

“The delay in allowing inspectors into the country, the announcement about Isfahan, I think are further indications that Iran has still not made a strategic determination to surrender its nuclear program,” said Mitchell Reiss, State Department director of policy planning, in an April 9 interview with Arms Control Today. “What we appear to be seeing are tactical maneuvers to do as little as possible to avoid censure.”

Undersecretary of State for Arms Control and International Security John Bolton went so far as to say that “Iran is lying” at an annual meeting of NPT states-parties in New York.

“It is clear that the primary role of Iran’s ‘nuclear power’ program is to serve as a cover and a pretext for the import of nuclear technology and expertise that can be used to support nuclear weapons development,” Bolton said April 27.

Still, the June meeting appears unlikely to produce either Washington’s or Tehran’s preferred outcomes. Although Iran may not get the clean bill of health it desires, the United States may also be unable to provide sufficient proof to convince other countries to find Iran in noncompliance with its obligations under the NPT. Such a finding requires the board to refer the matter to the UN Security Council.

A State Department official argued June 20 that the lack of full sampling results from the military sites will make it more difficult for Washington to push the board to take “the strongest possible response” at the June meeting, adding that U.S. leverage will largely depend on the “tone and substance” of ElBaradei’s report. Washington may encourage the IAEA board to say it “cannot verify” Iran’s suspension of its centrifuge program because of the country’s demonstrated ability to manufacture relevant components at various locations throughout the country, the official said.

Whether Washington will push for the board to find Iran in noncompliance is unclear. The United States not only failed to persuade the board to adopt such a stance in its November resolution, it did not even attempt to do so during the debate over the March resolution.

Corrected online August 29, 2008. See explanation.





Iran and the International Atomic Energy Agency (IAEA) reached agreement in early April on an action plan to complete the agency’s investigation of Iran’s nuclear program. As a critical...

Plan B: Using Sanctions to End Iran's Nuclear Program

George Perkovich and Silvia Manzanero


On October 21, 2003, Iran vowed to sign and abide by the Additional Protocol to the Safeguards Agreement, to suspend all uranium-enrichment and reprocessing activities voluntarily, and to cooperate fully with the International Atomic Energy Agency (IAEA) in resolving questions regarding Iran’s nuclear program. Since then, however, concerns over Iran’s nuclear activities have increased. The latest resolution adopted by the IAEA Board of Governors on March 13, 2004, suggests that Iran has failed to fulfill its stated promises and has hidden important aspects of its nuclear program that could betray Iran’s intentions to develop nuclear weapons capabilities.

If Iran is found to be in noncompliance, the international community will be compelled to respond, or else the nonproliferation regime will be jeopardized. Military force should be the last resort for preventing or rolling back proliferation. Various forms of sanctions inevitably should be considered first.[1]
Still, any decision to place new sanctions on Iran for its nuclear weapons behavior will not take place in a vacuum. The United States has imposed sanctions on Iran for 25 years, punishing the Islamic republic for various transgressions ranging from support of terrorism and opposition to the Middle East peace process to violations of human rights and other transgressions.

Yet, the very breadth of the sanctions has limited their effectiveness. Applying new sanctions atop this jerry-rigged structure would not solve the “Iran problem” because the problem is so broadly and confusingly defined. Simply piling on more sanctions in the vague hope that the cumulative weight will lead to regime change in Tehran is misguided. U.S. policymakers need to clarify to themselves and Iranian decision-makers what are the one or two most important issues to resolve and then focus positive inducements and/or coercive measures to this end. Given the threat to regional and global security, ending Iran’s nuclear program should be the foremost objective of the United States and will require urgent action. Effective sanctions need to be designed that could be quickly implemented and rapidly affect Iran’s nuclear behavior in the event it wavers in fulfilling its commitments.

Current U.S. Sanctions Against Iran

Since the Iranian Revolution and hostage crisis of 1979, the United States has unilaterally imposed an extensive sanctions regime against Iran.[2] Initially, sanctions were imposed to punish Tehran and force the release of 63 U.S. embassy personnel by a group of militant Iranian students. Subsequent sanctions have aimed to prevent Iran from supporting terrorist organizations, hindering the peace process in the Middle East, and pursuing weapons of mass destruction (WMD). Yet, U.S. officials have not assessed the effectiveness of existing sanctions before adding new ones.

Since the Reagan administration designated Iran a state sponsor of terrorism in 1984, the United States has imposed sanctions on any trade with the Iranian government of arms and dual-use materials. In addition, the United States has banned Iran from receiving U.S. financial aid not exclusively directed toward humanitarian relief purposes. Washington also has forbidden international organizations such as the UN[3] from providing U.S.-derived funds to Iran. Likewise, Iran has been barred from direct loans, credits, insurance and export-import bank guarantees, and indirect assistance from U.S. contributions to multilateral development banks.[4]

In 1987 the Reagan administration issued Executive Order 12613, which prohibited all imports from Iran to the United States. The restriction also applied to Iranian crude oil, although trading oil overseas was still permitted.[5]

On March 15, 1995, the Clinton administration sanctioned most U.S. transactions related to the development of Iranian petroleum resources.[6] The only exceptions were licenses that, in effect, allowed U.S. firms to enter into oil swap deals with Iranian companies. Two months later, Executive Order 12959[7] banned U.S. investment in any area of Iran’s economy and prohibited most trade relations with Iran.[8]

The enactment of the executive orders, however, did not prevent other countries from investing in Iran’s energy industry. Thus, in 1996 Congress approved the Iran-Libya Sanctions Act (ILSA), which would sanction foreign companies that invest more than $20 million in developing Iran’s energy sector.[9] Secondary sanctions have been highly controversial because of their alleged extraterritorial jurisdiction. In 1997 the Clinton administration waived sanctions against a consortium of European, Russian, and Malaysian firms investing in Iran in order to avoid a potential trade conflict between the United States and Europe. In exchange, the European Union (EU) and Russia agreed to increase their efforts in nonproliferation and counterterrorism.

Under ILSA, the U.S. government also may proscribe any U.S. financial institution from offering Iran loans or credits of more than $10,000 within a 12-month period.[10] In addition, no U.S. entity may procure any goods or services from an Iranian person or institution.

In March 2000, sanctions on Iranian imports to the United States were eased. Current exceptions include gifts valued at $100 or less, information and information materials, carpets, and some food products.[11]

Overall, the effects of U.S. sanctions on the Iranian economy have been mixed. Iran’s economic performance has certainly been less than is needed to cope with a fast-growing population (65.9 percent working age): Iran suffers from a 16-21 percent unemployment rate and widespread poverty.[12] Yet, factors other than sanctions—war, corruption, and the lack of modernization policies—are the main causes for Iran’s economic woes. U.S. sanctions have intensified economic pressures by slowing, although not fully, curtailing badly needed foreign investment in Iran’s energy industry, which has not been able to take full advantage of periods of high oil prices.[13] U.S. sanctions also have prevented international lending institutions from funding development projects in Iran. Hence, Iran has been forced to undertake difficult fiscal reforms that have translated into important social dislocations.

Despite U.S. sanctions, Iran has been able to maintain a measure of economic growth by diversifying its trading partners and by heavily relying on oil exports.[14] Recent higher oil prices have allowed the government to begin restructuring the economy, enact new investment laws, and establish a stabilization fund for times of economic hardship. ILSA sanctions have not prevented non-U.S. foreign investment from flowing into Iran’s energy industry, and none of the executive orders has prohibited U.S. companies from importing Iranian oil refined in third countries.

Most importantly, U.S. sanctions have not prompted Iran to change its behavior or governmental leadership along the lines desired by U.S. policymakers. Iran remains in the list of state sponsors of international terrorism, is still suspected of violating its obligations under the nuclear Nonproliferation Treaty (NPT), and has not moved beyond veiled rhetorical changes in its relationship with Israel. Perhaps no sanctions regime could motivate Iran to make the changes desired by the United States, but U.S. policymakers have imposed sanctions that are excessively rigid, that lack clear policy objectives, and that have failed to attain multilateral collaboration. In short, they have been astrategic.

The astrategic management of sanctions reflects a broader confusion in U.S. policy toward Iran, which has shifted from containment to behavior change and, at times, regime change. This has led to contradictory and self-defeating U.S. policy pronouncements. For example, rather than rewarding Iran for its cooperative attitude in the U.S. military campaign to oust the Taliban and during the Bonn negotiations on Afghanistan’s transition, President George W. Bush cast Iran as part of the “axis of evil” in his 2002 State of the Union address.

The clumsiness of U.S. policy stems partly from the fact that sanctioning authority has been vested in two different power centers: Congress and the executive branch. Congress has often superimposed sanctions and conditions for their removal without a proper assessment of existing measures or consideration of their compatibility with evolving strategies toward Iran.

The question now is how can a sanctions-based strategy be improved so as to become an efficient policy tool against a defiant Iran. Certainly, if the goal were just to punish the Iranian leadership, no particular strategy would be needed. Iran’s decision to go nuclear, however, would have such global repercussions that we must search for effective ways to reverse such a decision or demonstrate to watching actors that Iran should not be mimicked.

Imposing Additional Sanctions: Defining the Goals

Should Iran resume its uranium-enrichment program, whose current suspension Iran insists is only temporary, or fail to implement the Additional Protocol and satisfy IAEA demands, the United States and others will have to react. Would regime change be justified? Can the United States cause or even facilitate it? Would a U.S. role in regime change not encourage an anti-American, anti-Western backlash? The Central Intelligence Agency has suggested that Iranian interest in nuclear capability spans from reformers to hard-liners, casting doubt that regime change, even if desirable for other reasons, would solve the nuclear problem. Alternatively, is behavior change in the current leadership possible?

Assuming that the United States and other NPT members do not simply accept cohabitation with a nuclear Iran, the choice between regime change and behavior change must be made in the near term. A strategy of regime change, meaning a change of leadership, implies that dealing with the current government is out of the question.[15] According to regime-change-first proponents, bargaining would be seen as granting legitimacy to an adverse government and, furthermore, would prolong its staying in power. Some argue that dealing with the current authoritarian government in Iran would conflict with the U.S. mission to promote democratic change in Iran and the greater Middle East. Yet, it should be possible to advocate human rights and democracy in Iran while seeking specific changes in the nuclear- and terrorism-related policies of current decision-makers. After all, the United States achieved security-enhancing arms controls with the Soviet Union while still seeking regime change from communism to democracy.

The biggest problems with a regime change strategy are that Iran might develop nuclear weapons before any significant changes of leadership occurs and, even if a new government emerged, it might also wish to retain nuclear-weapon options.

Thus, the U.S. objective today should be to prevent or, if that fails, reverse an Iranian decision to seek nuclear weapons. This requires increasing the costs of noncompliance to the Iranian leadership, regardless of who is in power. The implementation of new sanctions would, therefore, be directed toward behavior change in the areas that most immediately threaten U.S. and regional security interests.

The most robust way to apply effective new sanctions would be through a UN Security Council resolution under Chapter VII (Chapter VII sanctions are binding on all states). If Iran failed to comply fully with IAEA demands, such a resolution should be feasible given that the Security Council has previously declared that proliferation is a threat to international peace and security.

Such new sanctions must have a mechanism for their suspension if and when Iran complies with established demands. That is, if Iran provides a complete account of all of its nuclear activities; ratifies and implements the Additional Protocol unconditionally; and agrees to give up fuel-cycle technology that is perceived, thanks to Iran’s pattern of deception, as inherently suggestive of nuclear weapons, then these sanctions would be withdrawn.

Identifying Iran’s Vulnerabilities

New sanctions should be pursued only to the extent they are likely to be applied by a decisive collection of countries and can be adjusted if and as Iran’s nuclear policies improve. The focus should be on Iran’s energy industry and, more specifically, on restricting any foreign investment geared toward its development. Curtailing Iranian oil and natural gas exports as well as its imports of gasoline for domestic consumption would also be high-impact measures, but the United States would find few partners in pursuing such sanctions. Banning Iran from receiving credits for development projects from international financial institutions and blocking Iran’s membership in relevant trade agreements constitute additional pressure areas. Finally, curbing Iran’s most important non-oil export and import products would also send a strong message, particularly because the country is increasingly trying to diversify its trade. The key to all of the proposals would be to gain at least the cooperation of the EU and Japan in such sanctions.

Forty to 50 percent of the revenue of Iran’s central government comes from oil exports and they constitute about 80 percent of Iran’s total export earnings.[16] In order to remain a profitable source of revenue, however, the oil industry needs to be modernized, and new oil fields have to be developed. Iran is counting on approximately $5 billion per year in foreign investment to update onshore fields and develop new ones, and it requires $8-10 billion to develop its offshore fields. Similarly, Iran expends about $1 billion a year in oil imports, mainly gasoline, because it lacks the infrastructure and technology to produce its own.[17] Blocking the flow of gasoline imports would, therefore, constitute an additional pressure measure.

Iran also possesses the second-largest natural gas resources in the world. Although it now lacks the capacity and infrastructure to export significant amounts, Iran could become a leading exporter of natural gas in coming years. Sanctions on natural gas exports would send a strong message, but they would not cripple Iran’s economy significantly in the short term. Curtailing foreign investment in this industry, however, would more dramatically increase the cost of Iran’s noncompliance with the demands of the international community.

Investment in Oil and Natural Gas

Without new investment, aging oil fields and growing domestic demand will force Iran to become a net importer of oil by 2010.[18] Despite the threat from U.S. secondary sanctions, several countries have already invested in Iran’s oil industry, and more companies are expected to take advantage of the latest deals presented by the National Iranian Oil Company, a state-owned enterprise offering 16 new “buyback” contracts.[19]

In the next two decades, world energy demand also will shift from oil to natural gas. North America, Europe, and Asia are expected to count for 60 percent of this growth.[20] Because of its proximity, Iran hopes to become a key supplier of European and Asian countries. Despite its vast resources, however, Iran needs large amounts of foreign investment to develop treatment facilities, pipelines, and liquefied natural gas (LNG) tankers for transportation. Moreover, many of these deals are still being negotiated, providing the option of stopping investments before they begin rather than the more difficult task of reining in projects already underway.

Still, a new natural gas sanctions initiative would have to encourage a large number of current and prospective investors to turn away from a nearly unparalleled supplier. China Petroleum & Chemical Corporation (SNP), which has shown interest in bidding for Iran’s latest offers, has already stated that it will not yield to Washington’s pressure.[21] Further, despite growing concerns over Iran’s nuclear program, Total (France) and Petronas (Malaysia) recently have agreed to invest $2 billion for the creation of Pars LNG Company, which will manage the production of 8 million tons of LNG a year.[22]

By contrast, steps have already been taken toward building a coalition to block new investments in Iran’s oil sector, where Iran might have tremendous natural resources but is certainly not the only place to invest. Russia and the nearby Caspian oil fields of Kazakhstan and Azerbaijan are potential destinations for foreign investors.

After three years of negotiations, Spanish companies have pulled back, alleging commercial issues. John Browne, BP chief executive, has also expressed his concerns over investing in Iran given the current international political environment.[23] Although a Japanese consortium has recently agreed to develop the vast Azadegan oil field, negotiations took four years in part because Japan shares U.S. interests in nonproliferation and also did not want to jeopardize U.S.-Japanese trade relations.

Oil Exports

Iran’s key oil customers include Japan, China, South Korea, Taiwan, France, Germany, and Italy. These countries are among the world’s top petroleum net importers, and together they receive about 1.2 million barrels per day (mbd) out of the 2.6 mbd that Iran exports daily.[24] Although German and French demand for Iranian oil has decreased in the last decade, Japanese, Chinese and South Korean demand has increased; even Italy still imports about 8.8 percent of its oil from Iran. Establishing sanctions on Iranian oil would entail convincing these countries to stop oil trade with Iran or at least significantly decrease it. Even if they could find alternative suppliers, keeping Iran’s oil off the market would raise prices, thereby harming the global economy, particularly the economies of oil importers. This unwanted prospect would keep key importers from supporting a UN sanctions resolution in the first place.

Approximately 1.2 mbd would have to be added to the market and redirected to this group of countries.[25] One possible source is Saudi Arabia, which on its own has an excess capacity of 1.4-1.9 mbd as of 2003.[26] Venezuela, too, has the capacity to expand production by 1 mbd with stable foreign investment.[27] Other OPEC[28] countries such as the United Arab Emirates (U.A.E.), Kuwait, Nigeria, and Libya also have the capability to increase production at no significant additional cost.[29] Moreover, non-OPEC countries such as Norway, Mexico, and, more importantly, Russia, would be prime sources of substitute oil supply. Without almost one-half of its oil exports revenue, the Iranian central government would be seriously depleted of important resources.

Yet, such a reallocation of market share could be seen as an indirect reward to substitute supplier countries that are less than democratic. This could further undermine international will to cooperate with sanctions. More likely, countries whose participation is necessary for effective sanctions against Iranian exports—European states—would be reluctant to endanger their important non-oil trade relations with Iran. China and Japan import such large fractions of their overall oil supply from Iran that they would be highly reluctant to join sanctions on Iranian exports.

In sum, sanctioning Iranian oil exports would require many major states to put nuclear counterproliferation ahead of economic well-being, at least in the near term. In democracies, elected leaders would have to calculate whether voters would care more about the security implications of Iranian nuclear weapons than increases in their cost of living. These calculations would in turn be affected by national threat perceptions and the process by which sanctions would be authorized. Would a nuclear Iran be seen as a threat primarily to Israel and U.S. forces in the Persian Gulf and therefore not sufficiently threatening to Iran’s largest oil customers to warrant sanctioning? Would key EU states feel more threatened by Iranian nuclear weapons or by inflation? Major Asian importers of Iranian oil probably would not feel directly threatened by Iranian nuclear weapons and therefore would be reluctant to cooperate with sanctions. This reluctance would be greater still if sanctions were seen as primarily a U.S. “project.” Thus, it would be vital to obtain UN Security Council authority for such sanctions, in order to broaden the legitimacy of such action.

As a matter of principle, the United Kingdom, France, Russia, and China, as permanent members of the Security Council, should support decisive sanctions against any state that defies IAEA demands because the effectiveness of global nonproliferation efforts is at stake. Indeed, the viability of multilateral institutions and a rules-based international system would be threatened if the Security Council did nothing while Iran acquired nuclear-weapon capability after having been caught violating its NPT-related obligations. Unfortunately, the United States’ selective support of these same international institutions weakens Washington’s credibility in rallying others to take an appropriately firm stand against Iran.

Even if the prospects of an oil embargo are exceedingly dim, sanctions on foreign energy investment in Iran may well be possible. Other forms of international isolation should also be considered.

Tackling Credit

As a state designated a supporter of terrorism, Iran has been denied U.S. contributions via international financial institutions since 1984. The U.S. government also has lobbied other country members of such international bodies to withhold their donations. Between July 1993 and May 2000, a coalition among the Group of Seven world’s wealthiest states blocked all contributions from the World Bank to Iran. Consensus broke, however, when European partners adopted an engagement strategy with Iran. Since then, the World Bank has awarded four loans for development projects in Iran: $145 million for the Tehran Sewerage Project, $87 million for the Primary Health Care and Nutrition Project, $20 for the Environmental Management Support Project, and $180 million for the Earthquake Emergency Recovery Project. In addition to these, $150 million will be directed to establishing a local development fund, $80 million for a low-income housing project, $120 million for a water supply and sanitation project, and $295 million for a “de-urbanization” project.[30] As major contributors to international financial institutions and as trade partners with Iran, European countries could exert leverage by withholding these contributions if Iran violates its nonproliferation commitments. Their amounts might be insignificant, but restrictions on international credits could symbolically manifest Iran’s status as a nuclear pariah.

It should be noted, however, that, despite economic pressures throughout the last three decades, Iran has never applied for assistance from the International Monetary Fund (IMF). Although other countries have chosen to receive loans from the IMF’s Contingency and Compensatory Financing Facility, Iran has implemented arduous structural reforms that, in the long term, have helped the country ensure economic growth.[31]

Iran’s non-oil exports constitute about 15 percent of the country’s total export revenues (about $6 billion in 2003). Products include carpets, fruits and nuts, and chemicals. The U.A.E., Germany, Azerbaijan, Italy, Japan, China, and India are among Iran’s major customers. If a ban on exports from Iran were multilateral, it would also intensify the international isolation that Iranian society clearly wishes would end.

Perhaps as significant and difficult to achieve as a multilateral ban on Iranian non-oil exports would be to restrain other countries’ exports to Iran. Although Iran managed to find new providers to substitute for banned U.S. imports, the cost that Iran has incurred in value and quality, particularly on high-tech products, has been significant. Iran is presently in great need of machinery, transportation vehicles, chemical products, iron, and steel. Current major suppliers to Iran include the EU with 37.2 percent of Iran’s total imports, Russia with 5.6 percent, the U.A.E with 5.5 percent, and Japan with 5 percent.[32]

The EU position here is very strong. On December 12, 2002, the EU and Iran began negotiations on a “Trade and Co-operation Agreement.” The treaty is contingent on Iran’s compliance with European demands on issues related to terrorism, support for a peaceful resolution of the Middle East conflict, clearance over Iran’s WMD programs, and human rights. These prerequisites are “interdependent, indissociable, and mutually reinforcing elements of the global approach which is the basis for progress in the EU-Iran relations.”[33] Because the World Trade Organization keeps denying Iran entry, the proposed EU-Iran agreement represents Iran’s best bridge to the West. Isolation by Europe and the United States would dramatize the cost Iran would pay for seeking nuclear-weapon capabilities. Russia, too, would be forced to collaborate with this multilateral sanctions regime or face the possibility of being left without its privileges at the Group of Eight negotiation table.[34]

Regardless of their differences with the United States, France, Germany, and the United Kingdom must prove that they are truly committed to the basic premises of the Trade and Co-operation Agreement and the conditions they insisted that Iran agree to in October 2003. If Iran decides to restart its uranium-enrichment program or impede IAEA inspections, French, German, and British firms will have to forgo significant potential profits (based on 2002 data, about $1.109 billion, $1.807 billion, and $666 million in exports, respectively). Again, these states would have to decide if upholding the norms and terms of the nonproliferation regime were important enough to penalize Iran for defying them.


Iran’s resumption of its uranium-enrichment program or failure to satisfy IAEA demands fully will present a crucial challenge to the preservation of the nonproliferation regime. In that case, upholders of nonproliferation norms should pursue a sanctions-based strategy that has as an immediate priority to reverse Iran’s threatening decision. Such a punitive measure would be intended to increase the costs of noncompliance for the Iranian leadership. It would also require that U.S. policymakers honestly acknowledge the primacy of this goal in their relations with the Islamic republic. This article has suggested the most (and least) promising targets of potential sanctions.

Ultimately, a broader strategy of engagement and domestic political changes in Iran are the only solutions to the country’s nuclear aspirations. Sanctions should be understood as just one tool that, in this case, should be used with the very specific goal of redressing threats to international peace and security. The daunting prospects of rallying international support for sanctions if Iran violates its commitments not to pursue nuclear-weapon capabilities should only deepen leading states’ determination to prevent this development from occurring in the first place.


1. Although other types of sanctions might be imposed and/or more rigorously implemented (i.e. sanctioning foreign companies trading WMD materials and expertise with Iran), this paper examines only the feasibility of new economic sanctions on Iran. Parallel sanctions on arms and technology sales also should be considered. U.S. Undersecretary of State for Arms Control and International Security John Bolton recently stated that 13 companies will be sanctioned for providing WMD technology to Iran. See Michael Eisenstadt, “Russia Arms and Technology Transfer to Iran: Policy Challenges for the United States,” Arms Control Today, March 2001; John Bolton, testimony before the House International Relations Committee, March 30, 2004.

2. For a more expanded explanation, see Meghan O’Sullivan, Shrewd Sanctions: Statecraft and State Sponsors of Terrorism (Washington, DC: Brookings Institution Press, 2003); Hossein Alikhani, Sanctioning Iran: Anatomy of a Failed Policy (New York: I.B. Tauris, 2000). For a compilation of U.S. sanctions against Iran, see Kenneth Katzman, U.S.-Iranian Relations: An Analytic Compendium of U.S. Policies, Laws and Regulations (Washington, DC: Atlantic Council, 1999).

3. The only exceptions are U.S. contributions to UNICEF and the IAEA. Also, the Foreign Assistance Act of 1961 forbids U.S. foreign assistance to countries on the U.S. terrorism list. This provision was added by the International Security and Development and Cooperation Act of 1985. Nevertheless, under Section 620A, the U.S. president might waive restrictions on the basis that doing so is in the U.S. national interest. Katzman, U.S.-Iranian Relations, p. 59.

4. Ibid., p. 64

5. Executive Order No. 12613, October 30, 1987.

6. Executive Order No. 12957, May 15, 1995.

7. Clarified by Executive Order No. 13059, August 19, 1997.

8. These executive orders invoked the powers vested in the president by the International Emergency Economic Powers Act and the National Emergencies Act, although EO 12959 was also based upon the authority provided by the International Security and Development Cooperation Act. For further explanation of the sources of authority for U.S. unilateral economic sanctions, see Alikhani, Sanctioning Iran, pp. 32-56.

9. Congress reauthorized the ILSA on August 3, 2001.

10. These measures were reinforced in 1992 by the Iran-Iraq Non-Proliferation Act and expanded in 1996 to apply to any other state helping Iran attain weapons of mass destruction. Under the Foreign Assistance Act of 1961 the United States has also prohibited exports of arms-related materials and dual-use items.

11. Office of Foreign Assets Control, U.S. Department of the Treasury, “What You Need to Know About U.S. Economic Sanctions.”

12. CIA, World FactBook; Iran Statistical Center.

13. O’Sullivan, Shrewd Sanctions, pp. 67-71.

14. Iran’s gross domestic product has gone from 3.4 percent in 1999 to 2.0 percent in 2000, 5.3 percent in 2001, 5.9 percent in 2002 and an estimated 6.7 percent in 2003. “Islamic Republic of Iran: Statistical Appendix,” IMF Country Report no. 03/2003, September 2003.

15. Tactics for regime change include military invasion and removal of the unwanted government, support of armed anti-government forces, aggressive military/political/economic pressure, international propaganda, and so on. The United States has displayed this range of tactics historically to mixed effect against Iran (1953), Chile (1973), South Africa (1980s), and the Soviet Union (Cold War). Today, however, regime change will not solve the security challenge posed by Iran’s nuclear program.

16. Energy Information Administration (EIA), “Iran,” Country Analysis Brief, November 2003.

17. Ibid.

18. Kenneth Katzman, “The Iran-Libya Sanctions Act (ILSA),” CRS Report for Congress, updated July 31, 2003, p. 2.

19. Arrangements are made possible by the 1987 Petroleum Act whereby foreign firms fund and manage the development of oil and gas fields in exchange for a pre-accorded share of production. All production operations are eventually transferred to the National Iranian Oil Company.

20. Bob Tippee, “Worldwide Gas, LNG Demand Poised to Surpass Oil,” Oil & Gas Journal, September 22, 2003, p. 28.

21. Sally Jones, “Sinopec Wants Iranian Oil Deal Despite U.S. Pressure—Exec,” Dow Jones Newswires, January 29, 2004.

22. “Iran Wins $2bn Gas Deal with Total and Petronas,” DailyNews, February 26, 2004.

23. “Iranian Oilfield Bids Soldier on Despite Set-Back” Daily Times, January 30, 2004.

24. The United States tops the list, with Spain and India in seventh and eighth places, respectively.

25. Based on 2003 production levels and not including Taiwan’s data.

26. “The New Geopolitics of Oil,” National Interest, Winter 2003/04 (Internet version).

27. EIA, “International Energy Outlook 2003: World Oil Markets,” May 1, 2003.

28. OPEC countries: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

29. EIA, “International Energy Outlook 2003.”

30. William E. Schuerch, testimony before the House Financial Services Subcommittee on Domestic and International Monetary Policy, Trade and Technology, October 29, 2003.

31. O’Sullivan, Shrewd Sanctions, p. 70.

32. European Commission summary: “Trade Issues: Bilateral Trade Relations, Iran.”

33. “EU-Presidency and Commission Joint Press Release on the Opening of the Negotiations With Iran,” Brussels, December 12, 2002.

34. Patrick Clawson, “Can ILSA Help Stop Iranian Proliferation and Terrorism?” statement before the House International Relations Subcommittee on the Middle East and Central Asia, June 25, 2003 (enforcement of ILSA and increasing security threats from Iran).

George Perkovich is Vice President for Studies at the Carnegie Endowment for International Peace. Silvia Manzanero is a Junior Fellow at Carnegie working in the Nonproliferation and U.S. Leadership Projects.





IAEA Condemns Iran—Again

Paul Kerr

The International Atomic Energy Agency’s (IAEA) Board of Governors has again adopted a resolution criticizing Iran for failing to cooperate fully with the agency’s investigation into its suspected nuclear weapons program, raising the stakes in Tehran’s dealings with the United Nations’ nuclear arm and, indirectly, the United States. The resolution calls on Iran to intensify its cooperation with the agency but defers possible action against Tehran until the next board meeting in June.

Although the resolution, adopted March 13, acknowledges that Iran has recently been “actively cooperating” with the IAEA, it also notes that “Iran’s cooperation so far has fallen short of what is required [and] calls on Iran to continue and intensify its cooperation.” A February report from IAEA Director-General Mohamed ElBaradei detailed Tehran’s failure to disclose several nuclear activities, despite past promises to comply with IAEA resolutions requiring such disclosure. (See ACT, March 2004.)

The board reserved its harshest language for Iran’s failure to previously disclose a research and development program for an advanced type of gas centrifuge, known as the “P-2.” The IAEA learned about that program this winter, even though Iran had claimed in October to have given a complete accounting of its gas centrifuge-based uranium-enrichment program. Gas centrifuges are used to produce low-enriched uranium (LEU) for use in nuclear reactors, but they may also produce highly enriched uranium (HEU) for use as the explosive material in a nuclear weapon. Iran had previously disclosed a large enrichment program which uses a simpler type of centrifuge, the “P-1.”

ElBaradei told the board March 8 that this failing was inconsistent with Iran’s October pledge to provide the IAEA with all information about its nuclear programs, terming it “a setback to Iran’s stated policy of transparency.” As part of that agreement, Iran also agreed to sign an additional protocol to its IAEA safeguards agreement and suspend its uranium-enrichment program. (See ACT, November 2003.) Iran signed the protocol in December 2003 and has pledged to act as if the agreement were in force until it is ratified.

IAEA safeguards agreements are to ensure that states-parties to the nuclear Nonproliferation Treaty (NPT) do not divert civilian nuclear activities to military purposes. Iran maintains that its program is solely for peaceful purposes. Additional protocols expand the IAEA’s authority to detect clandestine nuclear programs and increase the number of nuclear-related activities that member states must declare to the agency. The March resolution “urges” Tehran’s “prompt ratification” of the protocol.

Iran’s director-general for international political affairs, Amir Zamaninia, told the board March 13 that Iran omitted its advanced centrifuge program from its October report to the IAEA because the relevant “technical” personnel thought its pledge only required Tehran to report information about less-advanced centrifuges they had tested using nuclear material. Iran intended to report its more advanced program in accordance with its obligations under the additional protocol, he said.

The resolution also “calls on Iran to be pro-active in taking all necessary steps...to resolve all outstanding issues” outlined in ElBaradei’s February report. In addition to the advanced centrifuge program, these include Tehran’s experiments with polonium, a radioactive isotope that can be used to trigger a chain reaction in a nuclear weapon; the “nature and scope” of its laser-based uranium-enrichment program; and “LEU and HEU contamination” at two facilities associated with Iran’s centrifuge program.

Iran’s hesitant cooperation with the IAEA has caused concern since ElBaradei first visited Iran’s main uranium-enrichment facility in February 2003. For months, Iran lagged in providing information about its nuclear activities to the agency and in granting inspectors full access to facilities.

The resolution also “calls on” Tehran to maintain and expand its October commitment to suspend its uranium-enrichment activities. According to ElBaradei’s February report, Iran had suspended most of its enrichment-related activities but continued to assemble centrifuges and manufacture related components. Iran agreed in February to stop both of these activities.


The days leading up to the resolution’s adoption were contentious, the final version being the product of a compromise between the United States and other board members. For example, a U.S. Department of State official told Arms Control Today March 18 that Washington wanted the resolution to condemn Iran’s actions in stronger terms and include the fact, discussed in ElBaradei’s February report, that “military industrial organizations” own “most” of the workshops associated with Iran’s centrifuge programs. Washington, however, is “satisfied” with the resolution, the official said.

In contrast to its lobbying efforts prior to the last IAEA resolution concerning Iran, the United States did not push for the board to find Iran in noncompliance with its safeguards agreement. Such a finding would have required the board to refer the matter to the UN Security Council. The State Department official said, however, that the board should do so “at the appropriate time.” The official did not specify what actions Washington hoped the Security Council might take, but argued that they could include issuing a Security Council President’s statement or imposing economic sanctions.

The last resolution, adopted in November, employed language intended to avoid the requirement to send the matter to the Security Council, while conveying that Iran’s secret nuclear activities had violated its safeguards agreement. (See ACT, December 2003.)

The board referred North Korea to the Security Council last year in response to its refusal to cooperate with the agency, but the council has yet to take any action.

For its part, the official Islamic Republic News Agency (IRNA) reported March 17 that Iranian President Mohammad Khatami told reporters that Iran is “dissatisfied” with the resolution but will continue to cooperate with the IAEA. Iran’s ambassador to the IAEA had suggested March 10 that Iran might review its cooperation with the agency if Tehran did not approve of the resolution, according to IRNA.

The ambassador caused additional friction March 12 when he announced Iran was postponing an upcoming IAEA inspection. Although the ambassador explained that the delay was necessary because of the approaching Iranian New Year, Khatami indicated March 17 that its decision was a reaction against the resolution. ElBaradei announced March 15 that Tehran would allow the inspectors to visit March 27.

The State Department official said that even this two-week delay was “regrettable” because Tehran could use the time to cover up evidence of nuclear activities. The official added that Washington believes Tehran is continuing to conceal part of a secret nuclear weapons program and observed that Tehran only changed its stance on the recent inspections “after some other countries intervened.” The United States has repeatedly changed Iran with having a nuclear weapons program.

Iran also raised eyebrows when Foreign Minister Kamal Kharrazi stated that Iran will “definitely resume [uranium] enrichment when our relations with the agency become normal,” IRNA reported March 10. Iran has repeatedly emphasized the temporary nature of its suspension agreement, but Kharrazi’s statement was one of the strongest to date on the matter. Iran is legally allowed to enrich uranium under the NPT, but the United States wants a permanent halt to these activities because of concerns that Iran will be able to use its facilities to produce fissile material covertly.

Next Steps

The resolution requests ElBaradei to issue a report on Iran’s activities “before the end of May” and states that it will consider the agency’s “progress in verifying Iran’s declarations,” as well as a response to Iran’s “omissions.” The IAEA is also continuing to investigate Iran’s foreign suppliers, which includes a network headed by Pakistani nuclear official Abdul Qadeer Khan. (See ACT, March 2004.)

The State Department official said that the United States will continue to allow the IAEA to take the lead on resolving concerns about Iran’s nuclear program. In a March 18 interview on PBS’s Newshour with Jim Lehrer, ElBaradei said that he had suggested to U.S. officials during a March visit to the White House that they begin a direct “dialogue” with Tehran. The State Department official said Washington rejects this approach because the appropriate steps for Tehran to take are outlined in the IAEA resolutions and bilateral dialogue would undermine the IAEA process.





The International Atomic Energy Agency’s (IAEA) Board of Governors has again adopted a resolution criticizing Iran for failing to cooperate fully with the agency’s investigation into its...

IAEA Says Iran Failed to Disclose Key Nuclear Activities

Paul Kerr

Despite its October 2003 promise to declare all aspects of its nuclear program to the International Atomic Energy Agency (IAEA), a Feb. 24 IAEA report reveals that Iran has failed to disclose several nuclear activities. The IAEA Board of Governors is to discuss the report during its next meeting March 8.

Commenting on the agency’s investigation, IAEA Director-General Mohamed ElBaradei told reporters Feb. 24 that “we have seen some good cooperation coming from Iran, particularly with regard to access to sites” but added that he wants Iran to provide “much more prompt information,” according to Reuters.

Some of the most important items in the report concern Iran’s gas-centrifuge uranium-enrichment program. Gas centrifuges are used to produce low-enriched uranium (LEU) for use in nuclear reactors, but they may also produce highly enriched uranium (HEU), for use as the explosive material in a nuclear weapon. Iranian officials maintain that their nuclear program is for peaceful purposes, but the United States has continually expressed skepticism.

Last year, Iran acknowledged taking steps to build enrichment facilities and other elements of a complete nuclear fuel cycle. After an extensive investigation, the IAEA Board of Governors adopted a resolution in November condemning Iran’s pursuit of clandestine nuclear activities in violation of its IAEA safeguards agreement. Safeguards agreements are designed to ensure that states-parties to the nuclear Nonproliferation Treaty do not divert civilian nuclear programs to military purposes. In part, they require signatories to declare certain important nuclear activities to the IAEA.

Iran signed an additional protocol to its safeguards agreement in December, which strengthens the agency’s inspections regime and expands the number of activities that Tehran must declare to the agency.

Still, the 35-member Board of Governors, which includes the United States, gave Iran an opportunity to halt its clandestine efforts and cooperate fully with the agency’s investigation into its past nuclear activities, including providing the agency with complete information about its nuclear program. The board stopped short of referring Iran’s violations to the UN Security Council for possible penalties, although it preserved that option for the future. (See ACT, December 2003.)

The board has been particularly concerned by Tehran’s centrifuge program. IAEA inspectors visited Iran’s centrifuge facility at Natanz in February 2003. Its advanced state of construction led the agency to suspect that Iran had tested the centrifuges with nuclear material without first informing the agency—a violation of its safeguards agreement. Since then, Iran has admitted to testing centrifuges with nuclear material at a separate facility called the Kalaye Electric Company but has said it produced only uranium enriched to a very low degree. Tehran has attributed the IAEA’s discovery of other types of enriched-uranium particles at both the Kalaye and Natanz sites to contamination from imported centrifuge components.

The Feb. 24 report appears to cast doubt on Iran’s explanation. First, samples of domestically manufactured centrifuge components indicate that they were contaminated with a different type of enriched uranium than similar imported parts. Second, environmental samples conducted in the Kalaye facility indicate the presence of a type of enriched uranium that Iran has not declared to the IAEA and whose presence likely cannot be explained by contaminated components.

Taken together, both of these factors suggest that Iran has not been fully forthcoming about its previous nuclear activities and may be concealing some nuclear material it either imported or produced. The report states that, “until this matter is satisfactorily resolved, it will be very difficult for the [IAEA] to confirm that there has not been any undeclared nuclear material or activities.”

Calling it “a matter of serious concern,” the report also revealed that Iran failed to declare in October that it had conducted research and development on a centrifuge of a type more advanced than the one it had been using in its recently-disclosed enrichment facilities. According to the report, Iran showed the agency designs that it obtained in 1994 from “foreign sources” and told inspectors that it had conducted experiments with the centrifuges without using nuclear material. Although Iran told the IAEA that it had not received any centrifuges from its sources and had tested the machines using domestically manufactured components, a Feb. 20 report from Malaysia’s Inspector General of Police states that used centrifuges were sent to Iran from Pakistan in either 1994 or 1995.

On the other hand, a controversy over Iran’s implementation of its promise to suspend its uranium-enrichment activities appears to have been resolved. The November resolution stated that Tehran had promised to “suspend all enrichment-related and reprocessing activities,” but the scope of this suspension has been a matter of controversy. Iran suspended some of its activities in November and halted its enrichment activities at Natanz and other facilities by the end of 2003.

Tehran nevertheless continued to assemble centrifuges until mid-January and manufacture centrifuge components until February—actions that received criticism from Washington. Iran has now promised to stop both of these activities, but some components may still be manufactured under existing contracts. These, however, “will be stored and placed under agency seal,” the report says.

Iranian officials continue to say that they may restart the program in the future, but the United States is pressing for a permanent halt. CIA director George Tenet told the Senate Select Committee on Intelligence Feb. 24 that “it would be a significant challenge for intelligence to confidently assess” whether Iran had produced HEU from its enrichment facilities because of the dual-use nature of the technology.

Other Revelations

The IAEA report also states that in November Iran presented inspectors with plutonium it had reprocessed from spent nuclear fuel. The February report notes a “discrepancy” between the amount of plutonium the agency estimates Iran should have produced, based on the amount of spent fuel it reprocessed, and the amount Iran presented to the inspectors. The IAEA is still discussing the matter with Iran, the report says.

In addition, the report reveals that Tehran told the agency in November that it had produced polonium, a radioactive isotope that has civilian applications but can also be used to trigger a nuclear chain reaction in a nuclear weapon. Iran has not been able to provide evidence to support its claim that it produced the element for civilian purposes.

The report adds that the IAEA is still trying to clarify “the nature and scope” of Iran’s laser uranium-enrichment program, which it also recently admitted to having.

Consistent with recent revelations that a network headed by Pakistani nuclear official Abdul Qadeer Khan assisted both Iran and Libya with their nuclear efforts, the report points out “several common elements” between Libya’s and Iran’s nuclear programs, explaining that “the basic technology is very similar and was largely obtained from the same foreign sources.” Iran’s connections with this network, which also provided Libya with designs for a nuclear weapon, has invited speculation that Iran may have weapons designs it has not yet disclosed .

Next Steps

Whether the Board of Governors will take any action on this matter is unclear. The November resolution stated that the board should meet “to consider…all options at its disposal” if “further serious Iranian failures come to light.” However, the resolution did not specify further. Department of State spokesperson Richard Boucher stated Feb. 19 that the board “needs to...take appropriate action,” but he did not elaborate.

For its part, Iran appeared dismissive of the IAEA’s findings. According to a Feb. 25 report from the official Islamic Republic News Agency (IRNA), Secretary of the Supreme National Security Council Hassan Rowhani stated that Iran is only engaged in “research” on the advanced centrifuge project, adding that “Iran is engaged in other types of research but…does not deem it necessary” to report it to the United Nations.

IRNA also reported the same day that Hamidreza Asefi, Iran’s Foreign Ministry spokesperson, termed the polonium experiments a “misunderstanding,” stating that they occurred 13 years ago.

Iran: Assessment and Next Steps

The following excerpt is from a report released Feb. 24 by International Atomic Energy Agency Director-General Mohamed ElBaradei on the implementation of the nuclear Nonproliferation Treaty safeguards agreement in Iran.

Iran has presented all declared nuclear material to the Agency for its verification. Iran has also provided all of the inventory change reports, material balance reports and physical inventory listings requested by the Agency. While some corrections are required and are still pending, this is partially due to the need to establish the nuclear material hold-up in dismantled equipment and other problems associated with nuclear material accountancy for past activities. In addition, Iran has submitted design information with respect to facilities, as requested by the Agency, although some of the information needs to be revised and/or supplemented, which Iran has agreed to do.

Iran has been actively cooperating with the Agency in providing access to locations requested by the Agency. This included access to workshops situated at military sites. This is welcome. Also welcome is the decision by Iran to expand the scope of suspension to cover remaining enrichment activities, which, in the Agency’s view, will contribute to confidence building.

Although investigations are ongoing, the Agency has made good progress in verifying Iran’s statements regarding the UCF project and the associated experiments and testing activities. The Agency has also been verifying the suspension of those enrichment and reprocessing activities specified in Iran’s Note Verbale of 29 December 2003.

The omission from Iran’s letter of 21 October 2003 of any reference to its possession of the P-2 centrifuge design drawings and associated research, manufacturing and mechanical testing activities is a matter of serious concern, particularly in view of the importance and sensitivity of those activities. It runs counter to Iran’s declaration, a document characterized by Iran as providing “the full scope of Iranian nuclear activities” and a “complete centrifuge R&D chronology”. The Director General has continued to emphasize to Iran the importance of declaring all the details of Iran’s nuclear programme.

The Agency has still to resolve the major outstanding issue, of the LEU and HEU contamination found at the Kalaye Electric Company workshop and Natanz, and associated concerns. Until this matter is satisfactorily resolved, it will be very difficult for the Agency to confirm that there has not been any undeclared nuclear material or activities. The Agency is still waiting for Iran to provide requested information detailing the origin of the centrifuge equipment and components, the locations in Iran to which such equipment and components were moved and the associated details of timescales, and the names of individuals involved. The resolution of this issue will depend to a great extent on the cooperation of the country from which the imported items are believed to have originated.

Other issues requiring clarification include the nature and scope of Iran’s activities in relation to P-2 centrifuges, and the nature and scope of Iran’s laser isotope enrichment research and details of the associated equipment. The issue of the purpose of Iran’s activities related to the production and intended use of Po-210 remains a concern, in the absence of information to support Iran’s statements in this regard.

Although the timelines of the conversion and centrifuge programmes of Iran and the Socialist People’s Libyan Arab Jamahiriya (Libya) are different, they share several common elements. The basic technology is very similar and was largely obtained from the same foreign sources. As part of verifying the correctness and completeness of the declarations of Iran and Libya9, the Agency is investigating, with the support of Member States, whose full cooperation is essential, the supply routes and sources of such technology and related equipment and nuclear and non-nuclear materials.

The Agency will continue its efforts to resolve and clarify the outstanding issues. In this context the Director General has requested Iran to continue and intensify its cooperation with the Agency, in particular through the prompt provision of detailed information. The Director General will report to the June 2004 meeting of the Board, or earlier, as appropriate.

9 See the Director General’s report on the implementation of Libya’s NPT Safeguards Agreement (GOV/2004/12, para. 38).










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