The Compassionate,

The Merciful

Fundamental Principles

The objectives of the International Atomic Energy Agency (IAEA), as set out in Article II of its Statute, include the following: "The Agency shall seek to accelerate and enlarge the contribution of atomic energy to peace, health and prosperity throughout the world." This objective emanates from an important pillar of the non-proliferation regime, enshrined in legally binding provisions of the Non-Proliferation Treaty. In accordance with Article IV of the NPT, States Parties undertook to facilitate the fullest possible exchange of equipment, materials and scientific and technological information for the peaceful uses of nuclear energy. Indeed, the inalienable right of all States Parties to nuclear technology for peaceful purposes without discrimination constitutes the very foundation of the Treaty. This right emanates from two broader propositions.

1. Scientific and technological achievements are the common heritage of humanity. They must be used for the improvement of the human condition. The IAEA, in its resolution GC (43) RES/14 of 1 October 1999, has recognized that "many countries consider nuclear power, being a climatically benign source of energy, to be an eligible option under the Clean Development Mechanism of the Kyoto Protocol."

2. The requisite balance between rights and obligations is the basis of any sound legal instrument. This balance guarantees the longevity of the legal regime by providing incentives for membership and compliance. The provisions of the NPT and the IAEA Statute on the right to nuclear technology as well as the imperative of cooperation and sharing of the technology among those who have accepted the obligations of non-proliferation have been considered essential, during Treaty negotiations, in order to establish and maintain validity and viability of the NPT.

The NPT Members have remained guarded, as evidenced by their deliberations on NPT indefinite extension against the impression that membership in the NPT and the IAEA safeguard regime continue to entail impediments for peaceful use while non-membership is rewarded by impunity and acquiescence or, in certain specific cases, unwavering support.

Iran's Non-Proliferation Stance

• Iran has been a fervent advocate of non-proliferation and nuclear disarmament for decades and actively contributed to the international political and legal discourse in this area;

Iran has repeatedly underlined that nuclear and other weapons of mass destruction have no place in its defense program and perception. This is due not only to Iran's commitment to its obligations under the NPT and other relevant conventions, but arises from a sober strategic calculation;

o Iran believes and has an established policy that WMD will not augment its security, and would in fact increase its vulnerability in a volatile region prone to tension and hostility;

o Iran believes and has an established policy that an arms race in the region, particularly in the area of WMD is dangerous. Iran has no interest in, no intention to, and nor does it seek the ability to enter into this race. Instead, Iran fervently demands that this menace be contained and removed through effective non-proliferation measures;

Iran firmly pursues the goal of a region free from WMD through their total elimination.

Iran's Peaceful Nuclear Program

• The Islamic Republic of Iran, as a member of the NPT, has an inalienable right to nuclear energy for peaceful purposes;

Iran, like all other Member States, should have access to nuclear material, equipment and scientific and technological information in a non-discriminatory manner;

Iran is entitled to pursue its inalienable right. No justification is required to pursue an inalienable right;

Iran's peaceful efforts in the field of nuclear technology are founded on sound economic, scientific and environmental grounds;

The primary priority of the Iranian nuclear program is the generation of nuclear electricity. In addition, Iran has sought to take advantage of nuclear technology in medicine, agriculture and industry;

A peaceful nuclear program for an oil and gas rich country is feasible for the following reasons:

o Iran can not merely rely on fossil fuel for its energy for the following considerations:

* Continued use of energy in its present form is bound to turn Iran into a net importer of crude oil and some of its by-products in the coming decades;

* Local use of these resources as fuel will drastically affect Iran's foreign exchange earnings from export of crude oil and natural gas;

* The utilization of these resources in processing industries such as petrochemicals will generate much greater added value;

* The environmental impact of increased reliance on fossil fuel is a serious concern of the entire international community;

* Iran also has vast gas reserves. But their development is extremely costly and the costs can only be offset by gas export as envisaged and implemented in current gas development projects;

o In the projected 7000 megawatt scenario, Iran will annually save 70 million barrels of crude oil based on 60% EAF, with an economic value of over US$1.5 billion annually;

o The environmental value will amount to preventing the release into the atmosphere of over 157000 tons of carbon dioxide, 1150 tons of suspending particles, 130 tons of sulfur and 50 tons of nitrous oxide;

The advisability of a nuclear energy program for Iran was even endorsed by the US State Department, which in a memo of 20 October 1978, stated that the US was encouraged by Iran's efforts to expand its non-oil energy base, and was hopeful that the US-Iran Nuclear Energy Agreement would be concluded soon and that American companies would be able to play a role in Iran's nuclear energy projects; (Digital National Security Archive)

o In the 1970s, European and American companies were competing for the construction of several nuclear power plants in Iran producing a total of 23000 (Twenty Three Thousand) megawatts of nuclear electricity;

o The assertion now that Iran, because of its gas and oil resources, does not need nuclear energy can not be sustained. This assertion is clearly based more on the state of relations rather than concern about non-proliferation;|

o The conclusion drawn from this contradictory assertion to the effect that Iran's nuclear program must have non-peaceful intentions is subsequently also not sustained.

Iran's Initial Approach

• In the pursuit of its right to peaceful nuclear technology, Iran began with a fully transparent approach;

Iran sought the assistance of the Agency and its member-states from various parts of the World;

In official consultations with the Agency and member-states throughout the 1990s, Iran:

o Underlined its plan to acquire, for exclusively peaceful purposes, various aspects of nuclear technology, including fuel enrichment;

o Persistently invited its interlocutors to cooperate and participate in this field;

This is hardly the approach of a country embarking on illicit activity;

A more positive reception to the still-standing offer and request of Iran for cooperation in the field would have broken the spiral of mutual suspicion, and allowed mutual confidence to prevail since the initial stage.

A Pattern of Denial of Iran's Right

• Iran's right has been the subject of a systematic pattern of denial in the past 25 years;

Preventing Iran from exercise of its rights has prevailed over an extended period of time and continues to this date;

o A policy aimed at destabilizing Iran, coupled with an elaborate system to hamper its economic development and deprive it of modern technology;

o Disregard for obligations of providing and facilitating technology under the NPT and the IAEA Statute;

o Termination of bi-lateral and commercial contracts for provision of material, equipment and technology in the peaceful domain as a result of which:

* The Bushehr Nuclear Power Plant was scheduled to produce energy in 1980;

* Due to multiple breaches of contract, it is still in construction after 23 years and hundreds of millions of dollars of expenditure;

o The resulting situation can be interpreted as material breach of the treaty obligation to respect and facilitate the attainment of Iran's inalienable right to peaceful use of nuclear technology;

Restrictions on Iran's access to modern technology and equipment, even in the most essential needs of the civilian population, have encompassed nearly every field and not been limited to nuclear technology;

As a result, Iran has been left with no other option but to rely primarily on unofficial channels to acquire the means necessary for economic and technological advancement and the welfare of its population;

To consider Iran's procurement from unofficial channels as indication of concealment of ulterior intentions, therefore, neglects the underlying cause and is hence erroneous.

Iran's Response

•The protracted pattern of failure to facilitate and provide access by Iran to nuclear technology for peaceful purposes, coupled with an active campaign to deprive Iran of its right, compelled Iran to take certain limited measures to protect its inalienable right and its vital national interests;

Iran's shortcomings in reporting and declaring elements of its peaceful nuclear program were primarily due to the above-mentioned prior wrong and were motivated solely to avoid further hindrances in Iran's access to technology for peaceful purposes;

These measures were not contrary to Iran's obligations under the NPT or to the objectives of the IAEA safeguards system;

o At no time did Iran diverted nuclear material to non-peaceful use;

o Iran has now been able to provide a full accounting of all its activities leading the Agency to conclude that "to date, there is no evidence that the previously undeclared nuclear material and activities … were related to a nuclear weapons program;"

Therefore, the past failures by Iran can be described as failures in the past to meet the reporting and declaring procedures of the Agency and not attempts at diverting nuclear material - they were procedural, not substantive;

Rather than passing an unsubstantiated judgment that such failures were indicative of ulterior motives by Iran, it is reasonable to take into account that past failures were commensurate with a prior and unjustifiable failure to meet the obligations under the NPT and the IAEA Statute to facilitate and provide Iran with access to nuclear material, equipment and technology for peaceful use;

The fact that Iran was still able, albeit with tremendous hardship and excessive cost, to develop a primarily indigenous nuclear technology represent, ipso facto, clear and convincing evidence that:

o Undue sanctions, restrictions, impediments and obstacles to deny the rights of Member States run counter to the process of transparency and cooperation required by the Agency. It is also wrong to consider them as effective tools to deprive Member States from exercising their rights. Had it not been for the severity of impediments, Iran would have pursued all its activities with transparency and in collaboration with other fellow Members as it has always sought;

o The fact that Iran has remained loyal to the NPT and the objectives of the safeguards, despite its unwarranted deprivation from its fundamental right, demonstrates the depth of its commitment to nuclear non-proliferation. It is hard to perceive that any other Member, facing similar restrictions, would have sustained unreserved commitment to the Treaty.

New Horizons for Confidence-Building and Cooperation

•On 21 October 2003 and upon the invitation of the Government of the Islamic Republic of Iran, the Foreign Ministers of Britain, France and Germany paid a visit to Tehran. The Iranian authorities and the Ministers, following extensive consultations, agreed on measures aimed at the settlement of all outstanding IAEA issues with regard to the Iranian nuclear program and at enhancing confidence for peaceful cooperation in the nuclear field;

The initiative indicated a readiness to start a new and different approach whereby transparency and confidence-building would lead to cooperation and exchange of technology in the future.

Iran's Full Implementation of ALL Essential and Urgent Requirements

Following the Tehran Agreement, Iran took action to fulfill all of its promises:

o Iran submitted a full disclosure on the following day to the Director-General of the IAEA, providing a complete, accurate and consistent picture of its activities in the nuclear field;

* The letter indicated that Iran had decided to provide a full picture of its nuclear activities, with a view to removing any ambiguities and doubts about the exclusively peaceful character of these activities and commencing a new phase of confidence and cooperation in this field at the international level;

* The letter expressed the expectation that the Agency should take cognizance of Iran's concerns and constraints for the full disclosure of detailed information about these activities in the past;

* The letter further reiterated that all these activities have been exclusively for peaceful purposes in strict compliance with Iran's NPT obligations;

* The letter proactively declared all areas of activity "identified" by the Director-General in his report;

o Iran has provided to the Agency full, immediate and unrestricted access to "all locations the Agency requested to visit;"

o Iran has provided all further information and individuals requested by the Agency;

o Iran has implemented all corrective measures requested by the Agency and has agreed to take further necessary measures when so requested;

On several occasions, most recently in meetings on 8 and 19 November 2003, Iran requested to be informed of any further information or corrective measures that the Agency deemed necessary for the satisfaction of the essential and urgent requirements. Remedial action as may be requested by the Agency will be carried upon receiving such request;

Iran has thus fulfilled all these requirements and it follows that the relations between Iran and the IAEA need to be normalized. Iran will continue to offer full cooperation and assistance to the Secretariat in order that the process will be finalized by March.

Iran's Confidence-Building Measures

On 10 November 2003, Iran officially notified the Agency of its readiness to sign the Additional Protocol, and to begin the ratification process. Iran is also continuing to cooperate with the Agency in accordance with the Protocol;

On the same day, Iran informed the Agency that it has voluntarily suspended all uranium enrichment and reprocessing activities;

Iran went further and invited the IAEA to verify this voluntary measure.

The Wider Implications of the European Initiative

The initiative of France, Germany and the United Kingdom, if carried through to a successful conclusion, can set the foundation for a different and much more effective approach based on engagement, cooperation and confidence-building;

The non-proliferation regime stands to be strengthened from such an approach;

The realization of the balance envisaged in the NPT between rights and obligations of member states can thus emerge as the real and effective guarantee for the integrity of the non-proliferation regime;

In such a climate, there will be no reason for anything less than full transparency.

The Report of the Director-General

The international community expected that the Report should reflect the new reality of Iran's full cooperation and openness and should depart from the negative experience of the past;

It was expected that the Report covering a period of proactive cooperation and full disclosure would be more positive in tone than the previous one covering a period of less than full transparency;

The report could have turned the achievements of this new European initiative into an achievement for the Agency;

o It could have recognized the decisive significance of the European initiative;

o It could have highlighted the developments after October 21, rather than obscuring them by sandwiching every positive new development between negative experiences of the past, particularly since:

* The negative elements of the report are drawn from previous reports which were available to member-states and had been dealt with in previous Board meetings;

* Their inclusion had more of a psychological rather than informative character and impact;

o It could have attributed credit where it was due;

o It could have refrained from the inapplicable term, "breach", which is

* Not incorporated in the governing instruments of the Agency;

* Not supported by the factual findings and technical details summarized in the body of the report;

* Not even used in the previous report where failures enumerated by the Agency had been due to lack of full cooperation rather than the full disclosure of the present situation;

* Not brought officially to the attention of Iran in any of the high level meetings, including one just before the release of the report, despite the serious nature of the assertion;

The statement of the Director-General to the Board on 20 November 2003 represented a more concise reflection of the facts:

o It clearly separated past from present, thereby allowing new realities to be assessed objectively;

o It stated in more clear terms that Iran had fulfilled the essential and urgent requirement;

o It repeated the Director-General's conclusion in the Report concerning no evidence to link past Iranian undeclared activities to a nuclear weapons program, in spite of political attempts and public pressure to undermine this fundamental conclusion.

Substance of the Report:

The Statement of 20 November 2003 of the Director-General and his report of 10 November, notwithstanding its negative tone and approach, establish the following facts:

A. Nature and Scope of Undeclared Activities

Uranium Conversion

o During the past 30 years, researches, many for published university dissertations and theses, have been conducted in laboratory and bench scale for conversion of U3O8 to UF6, UF4 to UF6 and UO2 to UF4;

o Iran has had an inventory of more than 500 thousand Kg of imported U3O8, which has been under IAEA safeguards;

o Of this, the total amount of material used is less than 50 Kg of depleted and natural Uranium, having enrichment of 0.7% or less;

o Detail design information for the Uranium Conversion Facility was given to the Agency years ago;

o The Uranium Conversion pilot plant is still not operational.

Uranium Enrichment

o Laser Enrichment

* An American company signed a contract with Iran in 1975 to provide this technique (contract and other details were provided to the Agency in the October 21, 2003 disclosure);

* In the 1990s, contracts were signed for laboratory scale and bench scale (milligram and gram quantities);

* Some equipments were received, tested and dismantled;

* Details and copies of the contracts were provided to the Agency in the 21 October disclosure and the Agency inspectors have visited the store;

o Centrifuge Enrichment

* Only 10 machines have been installed and tested and enrichment of 1.2% reached;

* Even a complete cascade of 164 machines has not as yet been installed;

* More than 50,000 machines are required to fulfill the requirements of one nuclear power plant;

* The maximum enrichment capability of the projected 50,000 machines is 3.5%.

Plutonium Separation

o In 1990 and in the course of a bench scale experiment designed to separate molybdenum, iodine and xenon from fission products for medical purposes, insignificant quantities of plutonium (200 micrograms) were also extracted.

o The results of some of the research experiments were published in scientific journals;

o In 1992, following the relocation of the laboratory, the project was confined to separation of the three items and no further plutonium was separated;

o The equipment and irradiated material have been shown to Agency inspectors.

B. Conclusions

Iran has fulfilled all the essential and urgent requirements by:

o Disclosing all past and present activities and providing "significant additional information" in its letter of 21 October 2003 and its attachments; (paras 15-16, 50, 51)

o "Showing active cooperation and openness" (para 51)

* "Granting unrestricted access to all locations the Agency requested to visit;"

* "Provision of information and clarifications in relation to the origins of imported equipment";

* "making individuals available for interviews;"

o Taking all corrective measures required by the Agency: "corrective actions have already been taken or are being taken;"(Statement of the Director General and Annex 1 of the Report)

o Undertaking to take all further corrective measures when requested by the Agency; (para 49)

o This conclusion was more clearly stated in the Statement of 20 November that "our recent work has been much aided and accelerated by Iran's new policy, and by Iran taking the specific actions, deemed essential and urgent, requested of it in Paragraph 4 of the Board's September resolution;"

Iran's past shortcomings were technical in nature and scope and did not run counter to the objectives of the Safeguards Agreement:

o They were limited to reporting and declaring of peaceful nuclear activities; (paras 47, 48, 50)

o They involved very small amounts (mostly in micrograms and milligrams in laboratory scale) of nuclear material; (para 50 and Annex 1)

o The material was "not suitable for nuclear weapon purposes;" (Para 50 and Annex 1)

o There is no evidence of diversion to non-peaceful use; (Para 52)

o Therefore, the use of the word "breach" in the assessment section of the report is not founded in the facts or the governing instruments of the IAEA;

Iran's failures took place in the PAST, and Iran

o Has corrected all past failures (Statement of DG);

o Has no present failure;

Above all, "To date, there is no evidence that the previously undeclared nuclear material and activities referred to [in the report] were related to a nuclear weapon program;" (Para 52)

Iran has agreed to sign and implement the Additional Protocol, thereby providing full confidence about the peaceful nature of its nuclear program in the future.

The Road Ahead: Options for the Board of Governors

• Iran has started a process based on a political decision with far reaching implications;

Iran has nothing to hide;

o It is clear that Iran has no nuclear weapons program;

o Therefore Iran wants to cooperate;

Cooperation should be through mutual confidence and respect;

Political manipulation of any stage of the process undermines confidence and hinders cooperation;

Those who have publicly ridiculed multilateral disarmament instruments, regime and bodies may attempt to undermine the process of cooperation;

o Serving their goal of maintaining political pressure on Iran for reasons completely extraneous to non-proliferation;

o Undermining and destroying the new approach which stands to strengthen the non-proliferation machinery and regime, including the IAEA;

o Undermining the multilateral non-proliferation regime, including the IAEA;

There is no legal justification for this approach nor is it politically prudent;

The essence and substance of the body of the report provides the Board the possibility to advance the process of cooperation that started on 21 October 2003 by:

o Differentiating between the past failures and full openness and transparency of the present;

o Recognizing the implementation of essential and urgent requirements;

o Adopting a forward looking approach based on cooperation and confidence-building.

Iran's nuclear program has been, is and will remain peaceful. Iran's cooperation and transparency will continue so that confidence will be restored and situation fully normalized without delay.