The past year has been a time of significant challenges and achievements for the International Atomic Energy Agency. In the area of nuclear non-proliferation, the Agency has been at the centre of attention and has demonstrated its ability to perform objective and credible verification - but we continue to face a number of difficult and unresolved situations. In the area of nuclear safety and security, our work is making a difference and we see overall improvement, but much remains to be done. In the nuclear technology field, the Agency is contributing to sustainable development through its technical co-operation programme, with the benefits of nuclear applications increasingly recognized. And while nuclear power continues to hold great potential as an environmentally clean source of energy, it remains in a holding position due to a number of associated concerns.

Today provides an opportunity for me to review with you in more detail some of the Agency's activities in each of these areas.

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Nuclear Safety and Security

The safety and security of nuclear activities around the globe remain a key factor for the future of nuclear technology. It is gratifying to note that nuclear safety continues to improve at nuclear power plants worldwide, that more countries are raising their standards of performance in radiation protection, and that significant steps have been taken in the past two years to improve nuclear security.

One area that still needs improvement involves learning from past experience. When events occur at nuclear facilities, it is essential that this operating experience - the lessons learned - be properly communicated to other relevant nuclear facilities and, as applicable, be incorporated into their operational practices. This remains an area of current focus.

Status of International Conventions The development and adoption of legally binding norms has proven to be a powerful mechanism for enhancing safety worldwide. The Early Notification and Assistance Conventions continue to serve as mechanisms for Agency response missions to States Party during emergencies. The Agency is increasing its involvement in the Convention on Nuclear Safety, by reporting as requested on the trends and issues observed during our various safety missions. And the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management has now been in force for over two years. However, many States are not yet party to these conventions, and certain key areas of the nuclear fuel cycle are still not subject to conventions.

One convention that has gained increased attention recently is the 1979 Convention on the Physical Protection of Nuclear Material (CPPNM). In the past two years, 20 additional States have become party to the Convention, reflecting the importance of the international nuclear security regime. States are now working on a much needed amendment to broaden the scope of the Convention, that I hope will be adopted soon.

Safety Standards I am pleased to report good progress in the continuing revision and updating of international nuclear safety standards. Upgrades to all existing Agency standards should be completed by late next year. Over the next three to four years, we hope to fill in the remaining gaps in coverage - such as safety standards on geological waste repositories - and to implement a more coherent structure for the body of IAEA standards. These standards should be accepted and implemented worldwide, as the global reference for nuclear and radiation safety.

Safety Services The Agency's safety review and appraisal services assist Member States in the application of IAEA safety standards, and provide useful feedback on their effectiveness. These services originated predominantly in the field of nuclear installation safety, but now extend to cover many areas of radiation, radioactive waste and transport safety as well. I should note that, in particular, safety services and assistance to countries of Central and Eastern Europe operating power reactors has been at the centre of the technical co-operation programmes of those countries for the past decade - resulting in a broad and significant positive impact on the operational safety of those facilities. Demand for Agency services continues to be very strong; the Agency's Annual Report for 2002 lists more than 60 safety missions of various types to 29 States. Collectively, the results of the services constitute a substantial body of safety experience from around the world.

Protection Against Nuclear and Radiological Terrorism Agency efforts to help Member States improve their protection against nuclear and radiological terrorism are continuing at an exceptionally fast pace on multiple fronts. Since September 2001, working in Europe, Asia, Latin America and Africa, we have conducted nearly 40 advisory and evaluation missions, and convened more than 50 training courses, workshops and seminars. The IAEA also has strengthened its co-operation on nuclear security issues with other international organizations, including the UN and its specialized agencies, Interpol, Europol, the Universal Postal Union and the European Commission.

Safety and Security of Radioactive Sources: Despite the increased attention given to the security of radioactive sources since September 2001, some deficiencies remain. Information in the Agency database of illicit trafficking, combined with reports of discoveries of plans for radiological dispersal devices, makes it clear that a market continues to exist for obtaining and using radioactive sources for malevolent purposes. Agency evaluation missions have been held throughout Eastern Europe, Africa and Central America to assess Member State capabilities to detect nuclear and other radioactive material at their borders, and to help them respond to illicit trafficking. In the past year, IAEA missions to a number of States have assisted in the recovery, characterization and securing of radioactive sources seized in trafficking incidents. The Agency will continue its efforts to improve source safety and security.

Verification of Nuclear Non-Proliferation

Events of the past year have placed the nuclear non-proliferation regime under stress on multiple fronts, and have made it clear that concrete steps to strengthen the regime are urgently required. The Agency's role as an independent, objective verification body remains central to the effectiveness of the regime.

The IAEA's verification activities are designed to provide assurance that nuclear material and facilities are used exclusively for peaceful purposes. In the early 1990s, after the discovery of the clandestine nuclear weapons programme in Iraq, the international community committed itself to provide the Agency the authority to strengthen its verification capability - specifically, its ability to provide assurance not only that declared nuclear material has not been diverted for non-peaceful purposes, but equally important, that no undeclared nuclear material or activities exist.

This broader authority, however, is still far from universal. Regrettably, 46 States have yet to fulfil their legal obligations under the NPT to bring safeguards agreements with the Agency into force, and more than six years after the IAEA Board's approval of the Model Additional Protocol, over 150 countries still do not have an additional protocol in force.

I strongly urge all States that have not done so to conclude and bring into force the required safeguards agreements and additional protocols at an early date. As I have repeatedly stated, for the Agency to provide the required assurances, it must have the required authority.

Implementation of Safeguards in the DPRK The situation in the Democratic People's Republic of Korea (DPRK) continues to pose a serious and immediate challenge to the nuclear non-proliferation regime. Since December 2002, the Agency has not performed any verification activities in the DPRK, and cannot therefore provide any level of assurance about the non-diversion of nuclear material. We have continued to emphasize the need for a comprehensive settlement of the Korean crisis through dialogue, and it is my hope that the six-party talks will lead to such a settlement. I trust that any future settlement will ensure, inter alia, the return of the DPRK to the nuclear non-proliferation regime, and that the Agency will be given the necessary authority and resources to be able to fulfil its responsibilities under the NPT in a credible manner.

Implementation of United Nations Security Council Resolutions Relating to Iraq After an interruption of nearly four years, last November the Agency resumed verification activities in Iraq under the mandate provided by UN Security Council Resolution 687 and related resolutions. Between November 2002 and March 2003, the Agency sought to determine what, if anything, had changed in Iraq over the previous four years relevant to Iraq's nuclear activities and capabilities.

At the time the Agency ceased its Security Council verification activities in Iraq, we had found no evidence of the revival of nuclear activities prohibited under relevant Security Council resolutions. However, considering our four-year absence, the time available for the renewed inspections was not sufficient for the Agency to complete its overall review and assessment.

The Agency's mandate in Iraq under various Security Council resolutions still stands. In May, the Security Council adopted resolution 1483 in which, inter alia, it expressed its intention to revisit the mandates of the IAEA and the United Nations Monitoring, Verification and Inspection Commission (UNMOVIC). We are awaiting the results of that review and further guidance from the Council. Given the situation in Iraq, I believe it would be prudent for the UN and IAEA inspectors to return to Iraq, to bring the weapons file to a closure - and, through implementation of a Security Council approved plan for long term monitoring, to provide ongoing assurance that activities related to weapons of mass destruction have not been resumed. In the meantime, I trust that the Agency will be kept informed of the outcome of any current inspection activities in Iraq relevant to our mandate, in accordance with Security Council resolution 1441.

Application of IAEA Safeguards in the Middle East Pursuant to the mandate given to me by the IAEA General Conference, I have continued to consult with the States of the Middle East region on the application of full scope safeguards to all nuclear activities in the Middle East, and on the development of model agreements relevant to the establishment of a nuclear-weapon-free-zone in the region. I regret to report that due to the prevailing situation in the region I have not been in a position to make progress on the implementation of this important mandate, which is of direct relevance to non-proliferation and security in the Middle East. With the active co-operation of all concerned, I hope to move this mandate forward in the coming year. It is essential, in my view, that a comprehensive settlement in the Middle East be accompanied by a regional security structure that includes the establishment of the Middle East as a zone free from weapons of mass destruction. In my view a durable peace will not be attained without an adequate security structure, which in turn is difficult to achieve without a peaceful settlement. The two must go hand in hand.

Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran The Board of Governors this year has given considerable attention to the implementation of the NPT safeguards agreement in the Islamic Republic of Iran. In September, the Board adopted a resolution urging Iran to show proactive and accelerated co-operation, and to demonstrate full transparency by providing the Agency with a declaration of all its nuclear activities. The Board made clear that it was essential and urgent for all outstanding issues to be brought to closure as soon as possible, to enable the Agency to provide the required assurances.

Recently we have received what the Iranian authorities have said is a full and accurate declaration of its past and current nuclear activities and are in the process of verifying this declaration which is key to our ability to provide comprehensive assurance. Iran has also expressed its intention to conclude an additional protocol to its safeguards agreement which is key to our ability to provide comprehensive assurance. I will report to the IAEA Board later this month on the status of our implementation of safeguards in Iran.

Addressing Non-Proliferation Challenges Looking forward, it is clear that the Agency must have the required authority, information and resources to be able to provide the international community with the credible nonproliferation assurances required under the NPT. In that context, the international community must work hard to achieve the universality of the regime. We must also be more assertive in resolving the root causes of global insecurity - such as longstanding regional conflicts and other causes of instability - which provide incentives for the proliferation of nuclear weapons and other weapons of mass destruction. And, we must work together to develop and establish a system of collective security that does not depend on nuclear weapons, and accelerate the process of nuclear disarmament.

Recent events have made it clear that the non-proliferation regime is under growing stress. The current world situation is different, in many respects, from that of the late 1960s, when the NPT was being negotiated. A key difference is that information and expertise on how to produce nuclear weapons has become far much more accessible. This places extra emphasis on the importance of controlling access to weapon-usable nuclear material.

In light of the increasing threat of proliferation, both by States and by terrorists, one idea that may now be worth serious consideration is the advisability of limiting the processing of weapon-usable material (separated plutonium and high enriched uranium) in civilian nuclear programmes - as well as the production of new material through reprocessing and enrichment - by agreeing to restrict these operations exclusively to facilities under multinational control. These limitations would naturally need to be accompanied by appropriate rules of assurance of supply for would-be users.

We should equally consider multinational approaches to the management and disposal of spent fuel and radioactive waste. Over 50 countries currently have spent fuel stored in temporary locations, awaiting reprocessing or disposal. Not all countries have the appropriate geological conditions for such disposal - and, for many countries with small nuclear programmes, the financial and human resources required for the construction and operation of a geological disposal facility are daunting.

Taken together, these proposals in my view would provide enhanced assurance to the international community that the sensitive portions of civilian nuclear fuel cycle programmes are not vulnerable to misuse.

Conclusion

The Agency continues to play a key role in ensuring that the benefits of nuclear technology are shared globally for economic and social development, that nuclear activities are conducted safely, that nuclear and radioactive materials and facilities are adequately protected, and that a credible inspection regime exists to verify compliance with non-proliferation commitments.

This year marks the 50th anniversary of the 'Atoms for Peace' speech delivered before this body by President Eisenhower, in which he articulated a vision, shared by many world leaders, that would enable humanity to make full use of the benefit of nuclear energy while minimizing its risk. This vision led to the establishment of the International Atomic Energy Agency. Much has changed since that time, and I believe it is appropriate for us to take stock of our successes and failures - and to resolve to pursue whatever actions are required, including new ways of thinking and unconventional approaches, to ensure that nuclear energy remains a source of hope and prosperity, and not a tool for self-destruction.

Let me conclude by expressing my continuing gratitude to the Government of Austria, which has now served for over four decades as a most gracious and welcoming host to the IAEA.