Our agenda for this meeting covers a broad range of issues, including the Agency's Annual Report, the Technical Cooperation Report, the Safeguards Implementation Report, the report of the Programme and Budget Committee, and a number of specific nuclear technology, safety and verification issues. I will briefly address these and other issues of interest to the Board.

Annual Report

The Annual Report serves as the Board's report to the General Conference, and as the Agency's report to the United Nations and the general public. The draft report before you summarizes the scope and the results of the Agency's programme of work in 2003. In particular, it highlights the role of the Agency in transferring nuclear science and technology to Member States to promote social and economic development, our verification role in support of the non-proliferation regime, and our efforts to enhance nuclear safety and security.

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Nuclear Verification

The Safeguards Implementation Report and Safeguards Statement for 2003 The Safeguards Implementation Report (SIR) for 2003 is also before you. For 19 States with both a comprehensive safeguards agreement and an additional protocol in force or being otherwise applied, the Agency was able to conclude - having found no indication of the existence of undeclared nuclear material or activities - that all nuclear material had been placed under safeguards and remained in peaceful nuclear activities or was otherwise adequately accounted for.

For 125 other States (and Taiwan, China), the Agency was able to reach a more limited conclusion - namely, that the nuclear material and other items that had been placed under safeguards remained in peaceful use or were otherwise adequately accounted for. With regard to Libya and the Islamic Republic of Iran, both of which had been engaged in undeclared nuclear activities, the Agency was not able to draw this conclusion.

Implementation of Safeguards in the Democratic People's Republic of Korea Since 31 December 2002, when on-site verification activities were terminated at the request of the Democratic People's Republic of Korea (DPRK), the Agency has been unable to draw any conclusions regarding the DPRK's nuclear activities. Unfortunately, I have no new developments to report.

Implementation of Safeguards in the Islamic Republic of Iran You have before you a detailed progress report on the Agency's verification work in Iran. I will limit my remarks to a few key observations.

First, the Agency is making steady progress in understanding the nature and extent of Iran's nuclear programme and in resolving most aspects of Iran's uranium conversion and laser enrichment activities. Iran has continued to act as if its additional protocol were in force and in May provided its initial declarations. With Iran's cooperation, the Agency has had access to all requested locations. We have also made progress on verifying Iran's suspension of enrichment related and reprocessing activities, although the suspension is not yet comprehensive due to the continued production of centrifuge components at some workshops.

While a number of issues remain open regarding various aspects of Iran's nuclear programme, the central question is whether Iran's uranium enrichment activities have been fully declared. Two aspects relevant to this question are still being investigated.

The first relates to the origin of the particles of high enriched and low enriched uranium contamination found at various locations related to uranium enrichment in Iran. The information provided by Iran in April 2004 - information requested since August 2003 - has not been sufficient to resolve this complex matter. Iran should make every effort to provide additional relevant information, particularly about the origin of the components in question, and explanations about the presence of a cluster of 36% uranium-235 particles at one location.

Resolving the issue of contamination, however, requires the cooperation of other States from which the contaminated equipment is believed to have originated. I would call on those States to make every effort to help us resolve these issues. I should clarify, in this regard, that our mention in some of our reports of 'supplier States', or the involvement of other States in different forms, does not imply that the transactions involved took place with the knowledge of the respective governments.

Second, we need to gain a fuller understanding of the extent of Iran's efforts to import, manufacture and use centrifuges of the P-2 design. As mentioned in my report, the information provided by Iran with regard to the P-2 centrifuge programme, after repeated requests, has been changing and at times contradictory. Let me illustrate.

In Iran's October 2003 declaration, the P-2 centrifuge programme was not mentioned. Then, in January 2004, Iran acknowledged that it had received P-2 drawings from a foreign intermediary. At that time, Iranian authorities stated that Iran had not obtained any P-2 centrifuges, or components thereof, from abroad, and also stated that the P-2 programme had been only for small scale R&D. In April, however, Iran informed the Agency that it had, in fact, imported some components relevant to its P-2 enrichment activities - and in late May acknowledged specifically that these components were magnets relevant to P-2 centrifuges, and that, in 2002, it had attempted to obtain thousands of these magnets.

At the time of issuance of the report before you, additional information on the P-2 centrifuge issue was being provided by Iran, which we are currently assessing. We have also taken environmental samples relevant to this issue, which are currently undergoing analysis. I do hope that this information will help us in understanding and clarifying all issues relevant to the P-2 programme.

Clearly, this pattern of engagement on the part of Iran is less than satisfactory if it wishes to build confidence in the international community that Iran has indeed revealed the full extent of its nuclear programme. After a year of difficulties encountered by the inspectors, Iran needs to be proactive and fully transparent.

It has been almost two years since Iran's undeclared nuclear programme came to the Agency's attention. It 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, and provide the international community with the assurances it urgently seeks regarding Iran's nuclear activities. In that regard, the prompt cooperation of Iran is essential. Moreover, the cooperation of all other countries involved is also key to our ability to resolve some of these outstanding issues.

Implementation of Safeguards in the Socialist People's Libyan Arab Jamahiriya You also have before you a report on the Agency's verification activities with respect to Libya. Last December, Libya announced its decision to eliminate all materials, equipment and programmes leading to the production of internationally proscribed weapons - including nuclear weapons. In the months since, we have been working closely with the Libyan authorities to gain a complete picture of its nuclear programme.

The report before you summarizes the details of those efforts. Libya has proactively cooperated with the Agency by providing information and prompt access to all locations requested. We are making good progress in understanding Libya's past nuclear activities but some aspects still need to be assessed, and it is important that Libya provide the necessary information to enable that assessment to be made. Examples of these issues include: confirmation of the origin of the uranium hexafluoride (UF6) Libya received in 2000 and 2001; verification of Libya's planned capabilities for UF6 production; and understanding the source of high enriched and low enriched uranium contamination on gas centrifuge equipment in Libya.

Implementation of Verification Activities in Iraq The recent UN Security Council resolution 1546, inter alia, reaffirmed the intention of the Council to revisit the mandate of the Agency in Iraq. It has now been more than a year since our inspectors were last in Iraq. I sincerely hope that the Security Council will soon provide the long-awaited guidance on the future of this mandate. Given the current level of instability in the country, and Iraq's past nuclear weapons related activities and capabilities, it is important and urgent that a credible verification and monitoring system be reinstalled.

Status of Safeguards Agreements and Additional Protocols Our goal continues to be the ability to provide credible, comprehensive assurances regarding all States that have made non-proliferation commitments. This requires that States have both a comprehensive safeguards agreement and an additional protocol in force.

The Board has on its current agenda the approval of additional protocols for Albania, Cameroon and Morocco. On 30 April, additional protocols entered into force for the then 15 States of the European Union and for Euratom. Following the recent entry into force of additional protocols with Cuba, El Salvador, Ghana and Uruguay, the Agency now implements additional protocols in 60 States.

Although this status represents a marked improvement over the past year, more needs to be done. Forty-three States party to the NPT continue to have no safeguards agreements in force, and 129 do not have an additional protocol in force or otherwise applied. I reiterate my call to all States that have not done so to conclude and bring into force their respective safeguards agreements and additional protocols.

Integrated Safeguards Work continues on the implementation of integrated safeguards - limited, of course, to those States that have in force both a comprehensive safeguards agreement and an additional protocol. I am pleased to note that the Secretariat was recently able to reach all conclusions needed for the implementation of integrated safeguards in Japan - the State with the largest nuclear programme subject to Agency safeguards. The comprehensive nature of this work has enabled the Agency to enhance the effectiveness of safeguards in Japan and will result in reducing the frequency of its inspections at a significant number of Japanese facilities.

Safeguards Reviews Two evaluations of the Agency safeguards programme have recently been completed - one by external evaluators, coordinated by OIOS, and the other by the Standing Advisory Group on Safeguards Implementation. Taken together, these reviews covered the full range of management and technical issues, including operational practices and safeguards criteria. While we are still studying the results of these reviews, I would note that the analyses were overall quite positive regarding the effectiveness and efficiency of the safeguards programme, and provided a broad range of recommendations. After reviewing these recommendations, I intend to report to the November Board.

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Conclusion

The Secretariat remains committed to the efficient and effective implementation of programmes that reflect the priorities of all our Member States. Our success will naturally continue to depend on your guidance and support.