Our agenda for this meeting covers a broad range of issues, once again touching on all three Agency pillars - technology, safety and verification. I will discuss a number of topics related to each of these pillars, as well as a number of management issues.

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Nuclear Verification

The past year has been a challenging period for the nuclear non-proliferation regime. Current challenges include: the continuing refusal by the Democratic People's Republic of Korea to submit its nuclear activities to international verification; our ongoing efforts to verify the nuclear activities of Iran and Libya; the discovery of a sophisticated black market in nuclear technology and materials; the failure of some countries to fulfil their legal obligations to conclude and bring into force safeguards agreements; and slow progress on the conclusion and entry into force of additional protocols. For the nuclear non-proliferation regime to maintain its integrity, we must find a way to make tangible progress on all these fronts in the near future.

Status of Safeguards Agreements and Additional Protocols

Since my last report to the Board, the Secretariat has continued its intensified efforts to promote the conclusion of safeguards agreements and additional protocols, including two outreach seminars - one last November here in Vienna, and the other last week in Burkina Faso - and expanded consultations on the Model Additional Protocol with representatives from a number of governments.

Despite these efforts, progress remains limited. Since my last report, one safeguards agreement has entered into force, for the Republic of Kyrgyzstan, and one additional protocol, for the Republic of Korea. Additional protocols were also signed by Kazakhstan and the Islamic Republic of Iran. In the European Union, all 15 Member States have now notified the IAEA of their ratification of the additional protocol, but entry into force will occur only when the European Commission has notified us that the acceptance procedure by EURATOM, which is also party to the protocol, has been completed - which I hope will occur without delay.

Overall, 44 States have yet to fulfil their obligations under the NPT to bring safeguards agreements with the Agency into force, and even counting the addition of the European Union, additional protocols will have entered into force for only 54 States. I would reiterate my call on all States that have not done so to conclude and bring into force their respective safeguards agreements and additional protocols.

Implementation of Safeguards in the Democratic People's Republic of Korea

The nuclear activities of the Democratic People's Republic of Korea (DPRK) and its notice of withdrawal from the NPT, have set a dangerous precedent and thus remain a threat to the credibility of the nuclear non-proliferation regime. Since 31 December 2002, when at the request of the DPRK the Agency's onsite verification activities were terminated, the Agency has been unable to draw any conclusions regarding the DPRK's nuclear activities.

Last month, the second round of six-party talks took place in Beijing, with the participation of China, Japan, the Republic of Korea, Russia, the USA and the DPRK. The agreement to continue these talks is a welcome development. The Agency is not party to these talks, however, and I am therefore not in a position to report on their outcome. The Secretariat nonetheless remains ready to work with all parties towards a comprehensive solution that strikes a balance between the security needs of the DPRK and the need of the international community to gain assurance, through international verification, that all nuclear activities in the DPRK are exclusively for peaceful purposes.

Implementation of Safeguards in the Islamic Republic of Iran

You have before you a detailed progress report on the Agency's verification work in the Islamic Republic of Iran. I will limit myself, therefore, to a few broad observations.

First, I would like to note with satisfaction the marked progress in cooperation on the part of Iran since last October - in particular, by providing Agency inspectors access to requested sites, documentation and personnel, and by suspending reprocessing and uranium enrichment related activities, as a confidence building measure.

Second, I am seriously concerned that Iran's October declaration did not include any reference to its possession of P-2 centrifuge designs and related R&D, which in my view was a setback to Iran's stated policy of transparency. This is particularly the case since the October declaration was characterized as providing "the full scope of Iranian nuclear activities", including a "complete centrifuge R&D chronology".

Third, it is vital that, in the coming months, Iran ensures full transparency with respect to all of its nuclear activities, by taking the initiative to provide all relevant information in full detail and in a prompt manner.

Fourth, it is essential that the Agency receive full cooperation on the part of those countries from which nuclear technology and equipment originated. This cooperation has already been forthcoming, and I hope it will continue and expand. This is particularly the case with respect to the major outstanding issue regarding the low and high enriched uranium contamination found at the Kalaye Electric Company workshop and Natanz. Hopefully, with no new revelations, and with satisfactory resolution of these and other remaining questions, we can look forward to a time when the confidence of the international community has been restored.

Implementation of Safeguards in the Socialist People's Libyan Arab Jamahiriya

On 19 December 2003, the Socialist People's Libyan Arab Jamahiriya 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 Libya's nuclear programme. The report before you summarizes the details of those efforts.

Libya's failure, over many years, to declare to the Agency its nuclear material and activities represents a breach of its obligation to comply with the provisions of its safeguards agreement, and its acquisition of a nuclear weapon design is clearly a matter of utmost concern.

Following the disclosure of its undeclared nuclear activities, Libya has granted the Agency unrestricted access to all requested locations, responded promptly to the Agency's requests for information, and assisted the Agency in gaining a full picture of its nuclear programme. Libya also agreed to conclude an additional protocol, and to act in the meantime as if the protocol is in force. I will be signing this additional protocol with Libya this week. This active cooperation and openness is welcome, and will facilitate the Agency's ability to complete its verification of Libya's past nuclear activities. As in the case of Iran, the Agency also requires the full cooperation of the countries from which the nuclear technology and material originated.

Implications for the Non-Proliferation Regime, and Additional Measures

As part of verifying the nuclear programmes and activities of Libya and Iran, the Agency has been investigating the supply routes and sources of nuclear technology, including related equipment, materials and expertise. As mentioned in our reports, we have found increasing evidence of a complex black market network. We are working with many governments, both to bring relevant findings to their attention and to request assistance in our further investigation. An important part of our investigation is to find out whether the sensitive nuclear technologies in question have been spread to any other countries or end-users. I will continue to keep the Board informed of developments.

In my view, one of the most important outcomes of our verification work in recent months is the lessons we have learned on measures that must be taken to adapt the nuclear non-proliferation regime to the new challenges. First, it should by now be obvious that the additional protocol is a sine qua non for effective verification. Without an additional protocol in force, the IAEA has little prospect of uncovering the increasingly sophisticated clandestine nuclear weapons programmes. I believe that, for the Agency to be able to fulfil its verification responsibilities in a credible manner, the additional protocol must become the standard for all countries that are party to the Nuclear Non Proliferation Treaty (NPT).

Second, it is clear that the system in place to control the export of sensitive nuclear technology must be broadened in its reach and tightened in its controls. A system that aims to strike proper balance - between necessary controls against abuse, on the one hand, and the importance of assured access to peaceful technology, on the other - is in the interest of all, and should command global support. While many aspects of export controls are not managed by the Agency, they are clearly of direct relevance to our verification mandate, and we should put in place mechanisms to ensure that the IAEA is informed of all sensitive nuclear or nuclear related technology exports.

Third, as I first outlined at last year's General Conference, it is clear that the wide dissemination of the most proliferation-sensitive parts of the nuclear fuel cycle - the production of new fuel, the processing of weapon-usable material, and the disposal of spent fuel and radioactive waste - could be the 'Achilles' heel' of the nuclear non-proliferation regime. Here again, it is important to tighten control over these operations, which could be done by bringing them under some form of multilateral control, in a limited number of regional centres. Appropriate checks and balances could be used to preserve commercial competitiveness, to control proliferation of sensitive information, and to ensure supply of fuel cycle services. I am aware that this is a complex issue, and that a variety of views exist on the feasibility or possible modalities of such a multilateral approach. However, I believe that we owe it to ourselves to examine all possible options available to us. For that reason I will soon appoint a group of experts to examine in depth the feasibility of moving forward with such measures, and I will naturally share their findings with you.

In the meantime, existing facilities that use high enriched uranium (HEU) applications - for example, to produce medical radioisotopes - should continue, gradually but irreversibly, to be converted to low enriched processes. In this respect, I am pleased to note continued progress with Agency support on converting research reactors to use low enriched fuel. Naturally, we must continue also to press for a more effective global regime for the physical protection of nuclear and radioactive materials and nuclear facilities, particularly in regions that remain vulnerable.

Finally, I hope that, at next year's NPT Review Conference, parties to the Treaty will consider some of these urgently needed measures and agree on a specific course of action that will help re-engineer the non-proliferation regime and revive the stalling nuclear arms control and disarmament process.

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Conclusion

The Agency's verification role continues to be in the spotlight; the nuclear non-proliferation regime remains under stress, and a range of measures will be needed to restore confidence in its effectiveness. We have made solid progress in building an effective nuclear safety regime - but pockets of weakness remain, in both the nuclear and the radiation safety areas. Nuclear technologies provide significant opportunities for economic and social development - but we must work together to maximize their benefits and minimize their risks. And our effectiveness in delivering peaceful nuclear technologies to address development needs is dependent on all Member States contributing their financial share. I look forward to your continued support on all these fronts.