CoMPLIanCe WItH safeGuards treatIes

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approach has evolved yet further over the past decade and is now expressed as the “state level safeguards approach.” The state level safeguards approach is intended by the IAEA to continue in the vein of reaching a holistic understanding of a safeguarded state’s nuclear program, but adds to it an element of discretion on the part of the IAEA to choose to allocate its resources to focus greater attention on some states’ nuclear programs rather than others. In effect, the Agency can under its most recent policy focus its scrutiny on states whose nuclear programs are a source of concern to the Agency. Iran’s nuclear program has been firmly situated in this category since the IAEA first declared Iran in noncompliance with its safeguards obliga- tions in 2003.

The move by the IAEA to a state level safeguards approach has not been without controversy. A number of IAEA member states, most notably including Russia, have objected to the state level approach as being discriminatory and susceptible to politicization and as a policy device calculated to increase safeguards scrutiny upon some states without their consent.⁹

II. CoMPLIanCe WItH safeGuards

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It is important to understand how the various sources of law in this area are related to each other in order to then understand the distinctions that should be drawn when considering the question of safeguards compliance. As I explained above, the cornerstone legal instrument in the nuclear energy and nuclear nonproliferation area is the 1968 NPT. For NNWS parties, the NPT contains a provision in Article II obligating NNWS not to acquire nuclear weapons by any means. Article III of the NPT contains the obligation for each of the NNWS to conclude a safeguards agreement with the IAEA “for the exclusive purpose of verification of the fulfillment of its obligations assumed under this Treaty with a view to preventing diversion of nuclear energy from peaceful uses to nuclear weapons or other nuclear explosive devices.”

Article III of the NPT recognizes in this requirement to conclude a safeguards agreement the reality that is even more clearly spelled out in Article IV of the NPT, which is that nuclear materials are in- herently dual use. I discussed the dual use nature of nuclear materi- als at length in Chapter 1 of Interpreting the Nuclear Nonproliferation Treaty. The essence of this realization is that nuclear materials can be used for both peaceful purposes (e.g., electricity production, medical diagnostic applications), as well as military purposes (i.e., a nuclear weapon). Thus, the requirement for each NNWS to conclude a safe- guards agreement with the IAEA includes this acknowledgment that nuclear materials, and indeed the entire nuclear fuel cycle, are not presumptively suspect or evil things. Rather, nuclear materials can, and most typically are, put to exclusively peaceful uses. It is only their potential, and exceptional, diversion from those peaceful uses to military uses that a safeguards agreement is concerned with. Indeed, Article IV of Iran’s CSA provides:

The safeguards provided for in this Agreement shall be imple- mented in a manner designed:

(a) To avoid hampering the economic and technological de- velopment of Iran or international co- operation in the

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field of peaceful nuclear activities, including interna- tional exchange of nuclear material;

(b) To avoid undue interference in Iran’s peaceful nuclear ac- tivities, and in particular in the operation of facilities …

I think that this recognition of the dual use nature of nuclear ma- terials, which is written into both the NPT and the CSA, is vitally im- portant to remember when considering the concept of safeguards law compliance. Unlike Article II of the NPT, which focuses exclusively on the acquisition of nuclear weapons, an INFCIRC/ 153 safeguards agreement with the IAEA must treat the subject of nuclear materials, and their actual and potential uses within a state, in a more holistic way, taking into full account the fact that there are perfectly legiti- mate peaceful uses to which nuclear materials may be, and indeed are typically, put within a state. The importance and function of a CSA is, then, to monitor that peaceful nuclear program in order to verify that no nuclear materials have been diverted from it to a military program.

This is an important understanding for the concept of compliance with safeguards law, because it puts into proper context instances of safeguards noncompliance by safeguarded states. In most cases, safe- guards noncompliance results from the failure of a state to accurately report the locations, amounts, or types of nuclear material within its territory, or to fail to timely and accurately report the existence of facilities related to those materials. This failure to accurately report may, and typically does, have absolutely nothing to do with the ex- istence of a clandestine nuclear weapons program. It may simply be a bookkeeping error or a misunderstanding between the IAEA and the safeguarded state as to the proper classification of material. An example of the latter situation occurred in June 2014, when reports surfaced that Japan had failed to report 645 kilograms of plutonium to the IAEA under its INFCIRC/ 549 agreement with the IAEA. The INFCIRC/ 549 agreement is an additional, voluntary regime adopted among the five declared nuclear weapons states plus Belgium, Japan, Switzerland, and Germany, and communicated to the IAEA, for the

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purpose of increasing the level of detail with which self- reports are made regarding stocks of non- military- use plutonium. In the end, it was determined that Japan had correctly declared its plutonium stocks in accordance with the procedures of one safeguards agree- ment with the IAEA, but had mistakenly, though innocently, under- reported them in the context of yet another safeguards agreement with the IAEA. Ultimately the matter was quickly remedied by Japan through an amended declaration.¹⁰ Incidents like this one involv- ing Japan, in which there are accounting and reporting inaccuracies that are relatively minor, and are eventually concluded not to have involved any mishandling or diversion of nuclear material to military uses, occur fairly frequently.

In other cases, the reporting failures have been much more sig- nificant, as in the cases of Egypt (2005) and South Korea (2004). In both of these cases, the IAEA determined that the safeguarded state failed to report to the IAEA the existence and location of significant amounts of nuclear material and also failed to report design details of facilities related to them.¹¹ In the case of South Korea, it was revealed that uranium had been enriched to weapons grade, in experiments undeclared to the IAEA.¹² In both cases, however, the IAEA Board of Governors declined to report these instances of noncompliance with safeguards law to the U.N. Security Council, and the consensus among analysts is that in both cases the safeguarded state was not concealing a nuclear weapons program.

Of course, sometimes noncompliance with a safeguards agree- ment does evidence that something is seriously wrong in the safe- guarded state and that there has been diversion of nuclear material from peaceful to military uses. The IAEA’s determinations that North

10. Daniel H. Joyner, Did Japan Violate Its Safeguards Obligations through Failure to Report Plutonium?, Arms Control Law, June 18, 2014.

11. See Pierre Goldschmidt, Exposing Nuclear Non- compliance, 51 Survival 143– 164 (2009).

12.  Jungmin Kang et  al., South Korea’s Nuclear Surprise, 61 Bulletin of the Atomic Scientists 40– 49 (2005).

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Korea (1993) and Libya (2004) were respectively in noncompliance with their safeguards agreements turned out in both cases to consti- tute important findings that each state was in fact hiding a nuclear weapons program. And this finding by the IAEA was an important step in formally placing the issue of these programs onto the agenda of the U.N. Security Council.

So again, these various cases illustrate the fact that safeguards agreement noncompliance does not per se evidence the existence within a safeguarded state of a clandestine nuclear weapons pro- gram.¹³ This is not to minimize the important role of the IAEA in monitoring and verifying safeguards agreement compliance. It is only to clarify that the entire safeguards regime— and a fortiori that regime when only an INFCIRC/ 153 agreement is in force be- tween the IAEA and the safeguarded state— and the IAEA’s role in it, is designed only to account for all of the nuclear material within a safeguarded state. The question of the implications of any par- ticular circumstance of noncompliance with the terms of a state’s safeguards agreement is not one that can be answered on an IAEA inspector’s spreadsheet.

So how is safeguards noncompliance ultimately decided? And what does such a determination of safeguards noncompliance mean in a legal sense? The answer to the first question is found in the IAEA Statue, Article XII(C):

The inspectors shall report any non- compliance to the Director General who shall thereupon transmit the report to the Board of Governors. The Board shall call upon the recipient State or States to remedy forthwith any non- compliance which it finds to have

13. See John Carlson, Defining Noncompliance: NPT Safeguards Agreements, Arms Control Today, May 2009 (“The language of Article XII.C (‘compliance with … all … conditions of the … agreement’) seems to indicate that noncompliance is a failure to observe any condition in a safeguards agreement. Nevertheless, clearly not every safeguards breach constitutes noncompliance. Otherwise, the agendas of the board and the Security Council would be taken up with safeguards cases. There is a need to distinguish serious from less serious breaches.”).

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occurred. The Board shall report the non- compliance to all mem- bers and to the Security Council and General Assembly of the United Nations. In the event of failure of the recipient State or States to take fully corrective action within a reasonable time, the Board may take one or both of the following measures: direct curtailment or suspension of assistance being provided by the Agency or by a member, and call for the return of materials and equipment made available to the recipient member or group of members. The Agency may also, in accordance with article XIX, suspend any non- complying member from the exercise of the privileges and rights of membership.

Article XII(C) lays out a process for the determination of safe- guards noncompliance which begins with a determination by IAEA inspectors that noncompliance has occurred. The inspectors are then to transmit this finding to the IAEA’s thirty- five- state Board of Governors, which will then make its own finding regarding noncom- pliance. If it does find that noncompliance has occurred, the Board of Governors then communicates this finding to the U.N. General Assembly and Security Council and calls upon the safeguarded state in question to remedy the noncompliance. So, within the IAEA there are actually two decision makers regarding noncompliance— the in- spectors themselves in the first instance, and ultimately the IAEA Board of Governors. It should be noted that Article XII(C) of the IAEA Statute is the only provision in that treaty addressing safeguards noncompliance. It does not provide any criteria on which either the inspectors, or the Board of Governors, are to base their determina- tion of safeguards noncompliance.

The INFCIRC/ 153 CSA template, mirrored in most CSAs in force, adds a bit of flesh to this consideration by providing:

If the Board, upon examination of relevant information reported to it by the Director General, finds that the Agency is not able to verify that there has been no diversion of nuclear material required to be safeguarded under this Agreement, to nuclear

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weapons or other nuclear explosive devices, it may make the re- ports provided for in paragraph C of Article XII of the Statute of the Agency …

CSA Article 19 thus describes one situation in which the IAEA Board of Governors may find safeguards noncompliance and report the same to the U.N. Security Council. However, since all states who have concluded CSAs with the IAEA are also parties to the IAEA Statute, it would seem to make sense to read CSA Article 19 and IAEA Statute Article XII(C) together. In doing so, CSA Article 19 would appear to be essentially a lesser included basis for finding non- compliance, within the more broadly termed “any non- compliance”

standard of IAEA Statute Article XII(C). So again, there are no clear, comprehensive criteria in either the IAEA Statute or the CSA to guide IAEA inspectors or the Board of Governors in making a determina- tion of safeguards noncompliance by a safeguarded state.

Over the years, the IAEA Board of Governors has adopted its own, quite complicated taxonomy concerning how a compliance standard should be applied to each individual IAEA member state. This stan- dard varies according to the type(s) of safeguards agreements in force between the IAEA and each safeguarded state. The IAEA’s 2013 annual Safeguards Implementation Report illustrates these different standards in its summary findings:

1. One hundred and seventeen States had both comprehensive safeguards agreements and additional protocols in force:

(a) For 63 of these States, the Secretariat found no indication of the diversion of declared nuclear material from peace- ful nuclear activities and no indication of undeclared nu- clear material or activities. On this basis, the Secretariat concluded that, for these States, all nuclear material re- mained in peaceful activities.

(b) For 54 of these States, the Secretariat found no indica- tion of the diversion of declared nuclear material from peaceful nuclear activities. Evaluations regarding the

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absence of undeclared nuclear material and activities for each of these States remained ongoing. On this basis, the Secretariat concluded that, for these States, declared nu- clear material remained in peaceful activities.

2. Safeguards activities were implemented for 55 States with comprehensive safeguards agreements in force, but without additional protocols in force. For these States, the Secretariat found no indication of the diversion of declared nuclear material from peaceful nuclear activities. On this basis, the Secretariat concluded that, for these States, declared nuclear material remained in peaceful activities.

While the Secretariat concluded that, for 2013, declared nuclear material in Iran remained in peaceful activities, it was unable to conclude that all nuclear material in Iran was in peaceful activities.

As illustrated in these findings, for states that have concluded both an INFCIRC/ 153 CSA and an INFCIRC/ 540 Additional Protocol with the IAEA, the IAEA applies two separate compliance stan- dards:  (1)  Diversion of declared nuclear material from peaceful to military uses; and (2) Indication of undeclared material or activities.

For those states with both a CSA and an Additional Protocol in force that have been determined to pass the test of both of these stan- dards in a given year, the IAEA gives what it refers to as a “broader conclusion” that all nuclear material in these states remains in peaceful activities. Thus, in the excerpt above, in 2013 there were 63 states, out of the 180 total safeguarded states, which merited this

“broader conclusion.” However, 54 states that had both a CSA and an Additional Protocol in force with the IAEA passed only one of the two standards in this category, and thus the IAEA finds in its report only that declared nuclear material in those states remained in peace- ful activities.

For states that only have an INFCIRC/ 153 CSA in force with the IAEA, the IAEA considers that it does not have the procedural tools necessary to collect sufficient information to make a “broader

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determination,” so it has to limit itself to determining only whether declared nuclear material remains in peaceful activities. This standard is clearly stated elsewhere in the 2013 Safeguards Implementation Report, which in paragraph 17 states:  “[T] he conclusion in the Safeguards Statement for a State with a comprehensive safeguards agreement alone relates only to the non- diversion of declared nuclear material from peaceful activities.” It proceeds in paragraph 19 to ex- plain, concerning states with only an INFCIRC/ 153 in force:

In the course of its evaluation, the Agency also seeks to deter- mine whether there is any indication of undeclared nuclear ma- terial or activities in the State which would need to be reflected in the Safeguards Statement. However, without the measures pro- vided for in the Model Additional Protocol being implemented, the Agency is not able to provide credible assurance of the absence of undeclared nuclear material and activities for the State as a whole.

This then explains why, for states like Iran that only have an INFCIRC/ 153 CSA in force with the IAEA, the proper standard for determining safeguards compliance, pursuant to IAEA policy, is whether the IAEA is able to verify that declared nuclear material within the safeguarded state remains in peaceful activities.

Looking again, however, at the compliance determinations for 2013 made in the Safeguards Implementation Report, it is worth noting the following paragraph, already quoted above, specifically regarding Iran:

While the Secretariat concluded that, for 2013, declared nuclear material in Iran remained in peaceful activities, it was unable to conclude that all nuclear material in Iran was in peaceful activities.

I will return to this matter in Chapter 5, but I  wanted to note it while discussing the IAEA’s application of compliance standards.

Note that it is only Iran, out of the fifty- five states that had only an

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INFCIRC/ 153 CSA in force with the IAEA during 2013, to which the IAEA applied not only the proper standard regarding declared nuclear material but also the improper— by the IAEA’s own policy, expressed in the same document— standard regarding undeclared nuclear material.

Again, I will return to that subject of improper standards in the next chapter.

For purposes of the present discussion, the important ob- servation to take away from this review of the compliance stan- dards created by IAEA policy, expressed in the 2013 Safeguards Implementation Report, and the compliance determinations based upon them therein, is that while there are few if any criteria in the relevant treaty sources to guide IAEA inspectors and the Board of Governors in their safeguards noncompliance determinations, the IAEA has nevertheless constructed a policy framework pursuant to which it makes such determinations. This policy framework is com- plex and multifaceted, applying different standards depending upon the type(s) of safeguards agreements in force between the IAEA and a safeguarded state, and at times applying different standards to states with the same profile of safeguards agreements in force.

Pierre Goldschmidt, former Deputy Director General of the IAEA and Head of the Department of Safeguards, has been quite critical of the IAEA Board of Governors’ track record of inconsistency in applying its constructed noncompliance standards. In a 2009 article in the jour- nal Survival, Goldschmidt is particularly critical of the IAEA’s failure to formally determine that Egypt’s and South Korea’s actions, respec- tively, constituted noncompliance with their safeguards obligations, notwithstanding the significant failures of both states to accurately report concerning nuclear materials and related facilities within their territory. He writes, “It is therefore necessary for the agency to for- mally acknowledge that in the past some of its decisions have created potentially damaging precedents that need to be corrected to avoid any impression that the implementation of the IAEA Statute is selective.”¹⁴

14. Pierre Goldschmidt, Exposing Nuclear Non- compliance, 51 Survival 143– 164, at 158– 159 (2009).