The decision in 1995 to extend indefinitely the Non-Proliferation Treaty (NPT) was taken in an atmosphere of hopes and expectations that the Treaty would be invigorated in many ways: accelerated efforts towards nuclear disarmament, a strengthened verification regime and expanded peaceful nuclear co-operation. This Conference is to review achievements since that time. My report to you today will focus on the activities of the IAEA relevant to the implementation of the Treaty. 

VERIFICATION 

Let me start with verification issues. Successive NPT Conferences have rightly expressed the conviction that IAEA safeguards play a key role in the nuclear non-proliferation regime. This is because States Party to the Treaty rely on Agency safeguards for assurance of compliance by other Parties with their non­proliferation obligations and for demonstration of their own compliance. 

A number of the Principles and Objectives agreed in 1995 have a direct and significant relevance to IAEA safeguards. It would be appropriate therefore to review the status of these verification related objectives and principles. 

The Agency has continued, as reaffirmed by the 1995 Conference to function as the competent authority to verify and give assurance about compliance with States' safeguards obligations under Article III.1 of the Treaty. And the Agency has continued to provide assurance that no nuclear material which has been declared and placed under safeguards has been diverted for any explosive purposes or for purposes unknown. 

On the conclusion of safeguards agreements, I am pleased to report that a further 28 Treaty Parties have brought comprehensive safeguards agreements into force since the beginning of 1995, raising the overall total to 128. Unfortunately, however, a large number of States Parties continue to be in non-compliance with this Treaty obligation. The Agency is making every effort to encourage the remaining 54 Parties to conclude the required agreements. I therefore urge all states concerned to conclude and bring into force the required safeguards agreements without delay. 

With regard to the strengthening of the effectiveness of safeguards and the implementation of the decisions adopted by the Board of Governors in this regard remarkable progress has been achieved. As we are aware, the discovery of Iraq's clandestine nuclear weapons programme was both a setback and a watershed for the safeguards system. It jolted the international community into urgently considering ways and means to strengthen the safeguards system, in particular to equip it with the ability to provide assurance, not only about the non-diversion of nuclear material declared by the State, the focus of the "traditional" system, but also about the absence of undeclared nuclear material ant activities. 

Some of the strengthening measures could be anchored to the Agency's existing authority under the present safeguards agreements. Other important measures, however, required additional legal authority, and were the subject of a year long deliberation by the Agency's Board of Governors. The result was the adoption in May 1997 of a "Model Protocol Additional to Safeguards Agreements". As stated in the Foreword to the Model Protocol, it is to be the standard for individual Additional Protocols to be concluded with States with comprehensive safeguards agreements, in other words all non-nuclear-weapon States party to the NPT. The Foreword also requests all other States to conclude protocols to contribute to the effectiveness and efficiency of the system and to achieve universality. 

This new Protocol gives the Agency the means to provide credible and comprehensive assurances of compliance with non-proliferation commitments. To this end, the Additional Protocol empowers the Agency to seek a broad range of information about all aspects of a State's nuclear and nuclear related activities. It also provides broader right of access for Agency inspectors to nuclear and nuclear related facilities and locations and contains new administrative arrangements to improve the effectiveness and efficiency of safeguards. 

Under NPT safeguards agreements, the Agency has the right and the obligation to ensure, so far as it is able, that all nuclear material in all peaceful nuclear activities of the State is subject to safeguards, and that safeguards are in fact applied to such material. The Agency's obligation is thus not limited to nuclear material actually declared by a State; it also extends to that which is required to be declared. It is thus only in respect of States which have both a comprehensive safeguards agreement and an Additional Protocol in force that the Agency will be able to implement fully the safeguards required by Article III of the Treaty, and to provide assurance not only of the non-diversion of declared nuclear material, but also of the absence of undeclared nuclear material and activities. The new Model Additional Protocol is therefore fundamental to effective verification by the Agency of compliance with non-proliferation obligations provided for in the NPT. 

Against this background, it is disappointing that progress in signing and bringing Additional Protocols into force has been slow. With almost three years now having passed since the adoption of the Model Protocol, only 44 non-nuclear­weapon States Parties to the NPT have concluded Additional Protocols and only 9 such Additional Protocols have entered into force. Of those Treaty Parties which have yet to conclude Additional Protocols' 26 have nuclear facilities under safeguards. I appeal to all non-nuclear-weapon States Party to the NPT to conclude Additional Protocols at the earliest possible date to enable the Agency to discharge fully its responsibilities under Article III of the Treaty. 

The Secretariat continues to work to develop modalities for the implementation of the Model Additional Protocol and to help States in the process. A priority area of work is to "integrate" existing safeguards activities with the new strengthening measures. The aim is to develop the optimal combination of safeguards measures for a State as a whole. This combination will enable the Agency to meet its safeguards objectives with maximum effectiveness and cost efficiency. 

We expect the technical framework for the implementation of integrated safeguards to be completed by the end of 2001. Much preparatory work has been done already, but the Secretariat has to move forward with prudence as we gain experience with the new measures under the Model Additional Protocol. In matters of verification, efficiency should always be pursued, but never at the cost of effectiveness.

The 1995 "Principles and Objectives" stressed that fissile material transferred from military use to peaceful nuclear activities should, as soon as practicable, be placed under IAEA safeguards. Since 1996, the Agency has been engaged in consultations with the Russian Federation and the USA regarding Agency verification of weapon origin and other fissile material to be submitted by these two States. These consultations have been examining the legal, technical and financial aspects associated with the verification of such material. I am pleased to say that significant progress has been made both on the text of the Model Verification Agreement, and on the associated technical systems and equipment which will be employed. 

Of direct relevance to effective verification are efforts to protect nuclear and radioactive material against theft and other misuses, and to prevent, detect and respond to illicit trafficking in these materials. These are the objectives of the Agency's programme for the security of nuclear and radioactive material established in 1995. Elements of the programme include information exchange, the provision of standards and guides, and measures to help States control and protect nuclear material and radioactive sources. On physical protection, a 1998 review by the IAEA resulted in strengthened guidelines on protecting nuclear facilities and nuclear material in transport, use and storage against sabotage. 

The 1995 "Principles and Objectives" reiterated the call of successive Review Conferences that "every effort should be made to ensure that the IAEA has the financial and human resources necessary", inter alia, to meet its safeguards responsibilities effectively. But despite these calls, our safeguards mandate continues increasingly to be underfunded. Despite the increase in the amount of nuclear material under safeguards and the complexity of nuclear facilities to be safeguarded, the Agency's budget for safeguards has been almost frozen for over a decade as a result of a policy of zero real growth. Thus, while our regular budget for safeguards has been at a level of roughly $82 million per year for the last several years, our expenditure has averaged about $95 million per year. This has inevitably led to increasing reliance on extrabudgetary funding. In view of the uncertainties surrounding the receipt, timing and amount of extrabudgetary resources, reliance on such resources inhibits proper planning and makes it difficult for the Agency to fulfil its mandate in the most effective and efficient way.

No review of the Agency's verification activities would be complete without reference to the two cases of non-compliance with the respective NPT safeguards agreements, namely Iraq and the Democratic People's Republic of Korea (DPRK). With regard to Iraq, the Agency has not been in a position since December 1998 to implement its mandate under UN Security Council Resolution 687 and related resolutions. And although the Agency was able recently to inspect the presence of the nuclear material subject to safeguards which is still in Iraq, this inspection had a limited objective and was in no way a substitute for our required activities under the relevant Security council resolutions. At present therefore, the Agency cannot provide any assurance that Iraq is in compliance with its obligations under those resolutions. 

With regard to the DPRK, there is regrettably little to report since the 1995 NPT Conference. The Agency remains unable to verify the correctness and completeness of the DPRK's initial declaration of its nuclear material subject to safeguards and cannot, therefore, provide any assurance about non-diversion. The DPRK remains in non-compliance with its safeguards agreement, which remains valid and in force. The DPRK, however, continues to accept IAEA activities solely in the context of the "Agreed Framework" which it concluded in October 1994 with the United States of America. As requested by the Security Council, the Agency is monitoring a "freeze" of the DPRK's graphite moderated reactors and related facilities under that agreement. The degree of co-operation we receive from the DPRK continues to be limited and is linked by the DPRK to its perception of progress in implementing the Agreed Framework. 

PEACEFUL NUCLEAR CO-OPERATION 

Let me turn now to the question of the peaceful applications of nuclear technology. States Party to the NPT have committed themselves to promote peaceful nuclear co-operation with each other, with special regard for the needs of developing State Parties. Among international organizations, the IAEA has been recognized by previous Review Conferences as the principal vehicle for the transfer of technology foreseen in Article IV of the Treaty. 

The major goal of the Agency's technical co-operation activities has been to bring about a tangible socioeconomic impact in the recipient States by directly addressing their major sustainable development priorities in a cost effective manner. The technology pillar of the Agency's programme—comprising power and non-power applications, their safety related activities and the transfer of these technologies — remains crucial to its Member States, particularly to developing countries. 

Since the last Review Conference, the Agency has continued to strengthen its technical co-operation programme and activities. At the end of 1997 a new Technical Co-operation Strategy was adopted, with emphasis on quality projects that are closely associated with national development priorities, and are need driven. 

Technical Co-operation among Developing Countries (TCDC) continues to be a key strategy because it promotes the sustainability of project activities by building self-reliance and mutual interest among Member States. 

The largest proportion of Agency assistance, relates to non-power applications. For instance, in 1999 about 85% of the Agency's technical co-operation programme corresponded to projects in the areas of human health, food and agriculture, water resources management, environmental monitoring, industrial uses and related radiation protection and safety. 

Training is an important aspect of the Agency's technical co-operation activities. In 1999, the Agency organized over 200 training courses, workshops and seminars in which more than 2300 scientists from developing Member States participated. Over 1200 individuals received training under the Agency's fellowship and scientific visitor programme. Moreover, we delivered over $30 million worth of equipment and supplies, and fielded over 1400 international experts. 

All this represented an investment of about $100 million in 1999. The dimension and relevance of these co-operative activities can be better appreciated when one realizes that Member States also invested approximately an equivalent amount through in-kind contributions to the implementation of the projects. 

Previous APT Review Conferences have rightly emphasized the requirement that international nuclear co-operation take place under an appropriate international regime that ensures both the peaceful and safe nature of such co­operation. During the last five years the international nuclear safety regime has been greatly strengthened. 

In this context, a priority objective of the Agency is to establish a comprehensive and effective worldwide nuclear safety culture. The achievement of such a culture will be aided by a comprehensive set of international conventions prescribing the basic legal norms for the safe use of nuclear technology, by internationally accepted standards and by the provision of assistance to States in their implementation. The Agency is active on all these fronts.

The total volume of technical assistance provided by the Agency is considerable, but ensuring the predictability of resources remains a key challenge. In the past decade, income as a percentage of the target for the Technical Co-operation Fund has varied widely. Last year, of the 130 Member States of the IAEA, only 48 pledged 100% or more of their assessed target. Regrettably, 57 Member States made no pledges whatsoever. Of the fifteen major donors, only eight pledged in full. Although from a strictly legal point of view contributions to the Technical Co-operation Fund could be described as "voluntary", I submit that in the broader context of the NPT, contributions to this Fund are more than simply "voluntary". They are solemn obligations that need to be respected. 

CONCLUSION 

At the end of this review of Agency activities under the NPT, a number of important points are worth emphasizing. 

First, the Agency will continue to strive to strengthen its safeguards system in order to provide credible assurance. However, without the conclusion of the required safeguards agreements the Agency cannot provide any assurances about compliance by States with their non-proliferation obligations. And without the Additional Protocol the Agency can only provide limited assurances that do not adequately cover the absence of undeclared material or activities. 

Second, the Agency will continue to strive to achieve maximum efficiency in its safeguards operation, but in order to be able to perform its mandate in an optimal manner its safeguards activities have to be fully funded.

Third, the Agency's strengthened system of safeguards ushers in a new era in the history of NPT verification. It is a "smart" non-discriminatory system that will strengthen the non-proliferation regime. But should emphasize that verification, no matter how good it is, cannot work in a vacuum. It should continue to be supported by other elements of the non-proliferation regime, notably: effective physical protection and export control arrangements; enforcement mechanisms; and above all regional and global security arrangements and accommodations. These elements are symbiotic in nature and have to work together. 

Fourth, international co-operation in the peaceful uses of nuclear energy is a key component of the NPT. It should continue to be honoured and faithfully implemented, within an appropriate verification and safety framework. The IAEA is the main vehicle for promoting such co-operation and will do its utmost to effectively perform this task. This, however, requires that technical co­operation resources be adequate, predictable and assured. To this end, all States Party, particularly major donors, should pay their target contributions in full and on time. 

Fifth, although the NPT regime is by no means a perfect regime, it is clearly the best we have. We should therefore continue to cement it and build upon it to curb the proliferation of nuclear weapons and to underpin the safe transfer of peaceful nuclear technology. In many respects the regime has been strengthened. The verification system is now more vigorous; the Security Council is now better placed to exercise its role in prescribing compliance-inducing measures in cases of violations; and the exporting States are more conscious of the need to ensure that nuclear related items will not be misused and will be subject to IAEA inspectlon. 

On the other hand, the nuclear disarmament process has unfortunately continued to be sluggish. And recent indications are worrisome. It should also be noted that despite progress made in recent years towards achieving universality of the regime, several nuclear capable States still remain outside its bounds. 

The regime, which has been painstakingly constructed over three decades, should not be allowed to unravel. Of crucial importance to that end is an unequivocal commitment by all nations to the basic tenets of the regime: universal adherence to the regime, universal adherence to the new verification system, fulfilment of the obligation to enhance peaceful nuclear co-operation and transfer of technology, and above all active negotiation towards nuclear disarmament. One important and concrete step to this latter end would be a comprehensive and in depth dialogue among the weapon States on practical measures to gradually reduce the number of, and move away from dependence on, nuclear weapons for their defence strategies, and thus lead by example. We must—as we severe recently reminded by the International Court of Justice— "bring to a conclusion negotiations leading to nuclear disarmament in all its aspects".

Security through understanding and addressing insecurities, taking preventive measures, developing co-operative security arrangements and elaborating an effective system to ensure compliance is ultimately the best disincentive against the acquisition of nuclear weapons. For the sake of humanity, we must, sooner rather than later, move in this direction.