1. Introduction

Nuclear energy is gaining increased interest in many
countries, especially because of its potential to reduce
greenhouse gas emissions. In our region, in addition to
Indonesia, Malaysia, Thailand and Vietnam are seriously
considering nuclear power programs, and the possibility of
nuclear power is being discussed in Australia.

It is essential to ensure that the expansion of nuclear
programs does not lead to the further proliferation of nuclear
weapons, or increasing international suspicions and tensions.
This is where safeguards have a vital confidence-building
role. The non-proliferation regime has been developed to
provide assurance that nuclear programs are exclusively
peaceful. Based on the adage "trust, but
verify", an essential aspect of the Nuclear
Non-Proliferation Treaty is its verification mechanism, IAEA
safeguards.

Of course, the non-proliferation regime comprises much more
than safeguards. Important elements complementing the NPT
and IAEA safeguards include: controls on proliferation
sensitive technologies; the development of
proliferation-resistant fuel cycle technologies; relevant
regional and bilateral regimes; and effective domestic
regulation of sensitive technologies and materials as required
by Security Council Resolution 1540. Especially important
are incentives and sanctions in support of non-proliferation
objectives – these are receiving greater prominence in
the efforts of the Security Council and governments to dissuade
Iran from continuing with proliferant activities.

Until the 1990s the safeguards system was concerned
primarily with declared nuclear materials and
activities. It was thought that any undeclared nuclear
material/activities would be revealed through diversion of
declared nuclear material or misuse of declared
facilities. Hence the principal task of safeguards was
seen as being to confirm the correctness of
states' declarations, and the focus was on nuclear
material, nuclear accountancy, and regular inspections.
Since the early 1990s, following the discovery of Iraq's
clandestine nuclear weapon program, the emphasis has turned to
detection of undeclared nuclear material/activities
– referred to as confirming the completeness of
states' declarations.

The emphasis on providing assurance of the absence of
undeclared nuclear material and activities is changing both the
nature of the IAEA's safeguards procedures and the role
of the national safeguards authority. In place of
predictable and mechanistic procedures, the IAEA now requires
access to a broader range of locations and information.
This is placing greater emphasis on cooperation and transparency on the part of states. In addition,
national authorities need to be proactive in monitoring the
activities of industry and others. The operations of the
AQ Khan network, involving over a dozen countries including
some in our region, show the challenges now faced by national
authorities.

2. Developments in the Safeguards System

The safeguards system is not static, but has evolved over
time to reflect contemporary circumstances and
challenges. The "traditional" NPT safeguards
system was primarily focused on verifying declared nuclear materials and activities, applying procedures similar
to those developed for the item-specific safeguards that had
preceded the NPT.

It was generally assumed that development of fuel cycle
capabilities independent of declared facilities would be beyond
the resources of most states, and in any event would be readily
detectable, and therefore if proliferation occurred it was most
likely to involve diversion of nuclear material from declared
facilities. As the discoveries made about Iraq's
clandestine nuclear program in the early 1990s demonstrated,
these assumptions were not well-founded.

From the early 1990s the emphasis in safeguards has turned
to detection of undeclared nuclear material/activities
– referred to as confirming the completeness of
states' declarations. It is now recognised that if
a state has undeclared nuclear material/activities it is quite
likely there will be no obvious links between these and the
declared nuclear program.

The program to strengthen safeguards is focusing
particularly on establishing the technical capabilities and
legal authority necessary for detection of undeclared nuclear
activities. Central to these efforts is the effective use
of information – involving collection and analysis
of information that can enhance the IAEA's knowledge and
understanding of nuclear programs – and providing more
extensive rights of access to nuclear and
nuclear-related locations, including for the resolution of
questions arising from information analysis.

At the technical level, areas of development in safeguards
include:

• detection methods for undeclared activities –
  including environmental sampling and analysis, and satellite
  imagery;
• safeguards procedures – particularly greater use of
  unpredictability in inspections (e.g. through unannounced or
  short-notice inspections);
• the
  "state-level approach" – tailoring safeguards
  implementation to state-specific circumstances – moving
  from the uniformity of traditional safeguards, and basing
  safeguards intensity on information analysis and expert
  judgment taking account of all relevant
  circumstances.

Safeguards analysis and evaluation now involve questions
such as: what are the acquisition paths available to the
particular state; what are the possible indicators of
undeclared nuclear activities; what is the optimal safeguards
strategy for detecting such activities?

At the legal level, underpinning the program to strengthen
safeguards, is the additional protocol (AP). The AP is a
legal instrument complementary to safeguards agreements, which
establishes the IAEA's rights to more extensive
information and physical access. The model AP,
INFCIRC/540, was agreed by the IAEA Board of Governors in
1997. Indonesia was amongst the first states to conclude
an AP.

The combination of a comprehensive safeguards agreement and
an additional protocol now represents the contemporary standard
for NPT safeguards. Of the 64 non-nuclear-weapon states
(NNWS) NPT Parties with significant nuclear activities, at the
time of writing 45 have APs in force and 12 have signed APs or
had APs approved by the Board – an uptake of almost 90%
of such states. It is of serious concern however that
seven NNWS NPT Parties with significant nuclear activities have
yet to adopt the AP[1] – in addition Iran, which was applying the AP
on a "provisional" basis, has
"suspended" its cooperation under the AP.

Confidence in safeguards conclusions The
IAEA has decades of experience verifying non-diversion from
declared nuclear activities, and conclusions in this regard can
be reached with a high degree of confidence. Conclusions
on the absence of undeclared nuclear activities, on the other
hand, are necessarily qualitative, that is, they are
less definitive, less certain, than conclusions based on
verification of declarations.

Partly this reflects the need to develop more effective
detection techniques, but even if these were available today,
it is not possible with absolute certainty to prove a negative,
i.e. the absence of undeclared activities.
However, confidence in more qualitative conclusions can be
reinforced by availability of additional information supporting
the conclusion.

This situation raises two issues. First, a mechanistic
and legalistic approach by states to the implementation of
safeguards will not meet international expectations.
Where safeguards conclusions are more qualitative, a
state's cooperation and transparency to the IAEA assume
greater importance. The Agency will need broader
information, including access to locations of interest.
Denying or obstructing access will simply heighten suspicions
that the state has something to hide.

Second, IAEA safeguards may need to be complemented by
confidence-building measures, particularly measures to enhance
transparency amongst states. This is discussed in the
following section.

3. Importance of Transparency

Transparency is likely to become increasingly important, both
as an integral part of the safeguards system and as a
complement to the system. Transparency involves a number
of aspects, including: transparency of the state to the IAEA;
transparency of states to each other; and transparency of the
Agency itself.

There are many potential transparency mechanisms,
including:

• wider publication by states of information on their
  nuclear programs;
• conduct of research and operational programs on a
  collaborative basis amongst states;
• broader privatisation and globalisation of nuclear
  activities, and establishment of multilateral fuel cycle
  centres; and
• conduct of collaborative safeguards activities on a bilateral
  or regional basis.

In particular, in circumstances where states are looking for
additional confidence-building measures, bilateral or regional
safeguards arrangements could play an important role,
complementing IAEA safeguards – ABACC[2] is a valuable precedent
here.

Enhanced cooperation with and transparency towards the IAEA
will be particularly important. Strengthened safeguards bring
new requirements for states in terms of information, access and
cooperation. It is no longer sufficient for a state to meet
only its minimum legal commitments to the Agency (although that
is always a good start!) – rather, states need to
cooperate with the Agency to the standard necessary to maintain
the confidence of the international community. This
includes showing full transparency to the Agency, particularly
where there are issues of compliance or confidence-building to
be resolved.

For the IAEA, a particular challenge will be developing a
sufficiently rigorous method of testing transparency and
drawing appropriate conclusions – failure to cooperate
may be obvious, but where the state appears to be cooperating
it will be important to avoid being misled, not to draw broader
conclusions than are actually warranted.

4. Implications for National Nuclear
Programs

What do these various developments mean for national nuclear
programs? It is essential for states to be able to show
that their nuclear activities are exclusively peaceful.
Safeguards and complementary measures provide the mechanisms
for doing this. When the focus was on declared nuclear
activities, cooperation with the IAEA in implementing
safeguards procedures was sufficient. Now the range of
information needed for drawing safeguards conclusions has
broadened, and there is increasing emphasis on transparency.
What this means in practice – how to demonstrate
transparency and how to assess transparency in a meaningful way
– is expected to be the subject of ongoing development
for some time.

The most important theme in current non-proliferation
development is how sensitive nuclear technologies (SNT)
– especially enrichment and reprocessing – should
be controlled. There is no doubt that if these
capabilities became widespread the non-proliferation regime
will be seriously, perhaps fatally, weakened.

It is not simply a matter of placing SNT activities under
safeguards. Safeguards cannot provide assurance about the
future intent of states. An enrichment or reprocessing
facility under safeguards today could be used as the basis for
break-out from non-proliferation commitments in the
future. An essential aspect of non-proliferation is
minimising the risk that break-out could occur.

Claims that the NPT provides the right for every state to
develop all aspects of the nuclear fuel cycle are a
misrepresentation of the Treaty. The NPT speaks of the
right to the benefits of nuclear energy, not the development of
particular technologies. Further, the right to use
nuclear energy is not unqualified, but is subject to the other
provisions of the Treaty – including the commitment
against seeking nuclear weapons and the commitment to place all
nuclear material under IAEA safeguards.

Since the NPT does not elaborate on the means of access to
the benefits of nuclear energy, it is now apparent there is a
need to develop an international framework to deal with the
issues involved. These include:

• reducing the availability of SNT for misuse now or in the
  future;
• ensuring that states with nuclear power programs have a
  secure and reliable supply of fuel without any need to
  develop national enrichment or reprocessing
  capabilities;
• developing proliferation-resistant fuel cycle technologies.

Several proposals and initiatives to address these issues
are under development, the single most comprehensive approach
being the Global Nuclear Energy Partnership (GNEP) initiative,
launched by the US in February 2006.

These developments will have major – and positive
– implications for nuclear power programs. Key
features of the evolving international framework for nuclear
energy are likely to include:

• multilateral approaches to sensitive stages of the fuel cycle
  – already we are seeing an example with the Russian
  initiative to establish an international fuel cycle centre at
  Angarsk, Siberia;
• nuclear fuel supply assurances, incorporating a
  "cradle-to-grave" approach – including
  dealing with the issue of spent fuel management;
• development of small to medium sized reactors, suited to
  the needs of countries with relatively small power power
  grids.

5. Implications for National Authorities

As already noted, the principal task of the traditional
safeguards system was verifying states' declarations,
with a focus on nuclear material accountancy and regular
inspections. In this environment the role of national
safeguards authorities was straightforward – to
facilitate the IAEA's performance of relatively
mechanistic safeguards procedures.

This was easy for states – all states have, or should
have, legislation to regulate possession of nuclear material
and undertaking nuclear activities. Apart from meeting
international obligations (including the physical protection of
nuclear material as well as non-proliferation and safeguards),
effective control of nuclear material and activities is
necessary to ensure public health and safety. Since the
state will have a regulatory regime for these good governance
reasons, it is simple to add requirements for operators to
account for nuclear material to IAEA standards, to report
nuclear material transactions to the national authority, and to
cooperate with IAEA inspectors.

Today, the strengthening of safeguards, especially the
emphasis on providing assurance of the absence of undeclared
nuclear material and activities, is changing both the nature of
the IAEA's safeguards procedures and the role of the
national safeguards authority.

In place of predictable and mechanistic procedures, the IAEA
is making greater use of unannounced or short-notice
inspections. National authorities need to have procedures
in place to facilitate these – this can raise practical
issues in countries which require national authority staff to
accompany IAEA inspectors.

In addition, the IAEA now requires access to a broader range
of locations and information. Not all of these will be
covered by a "traditional" nuclear regulatory
regime. Under the additional protocol, the state is
required to report considerably more information on both
nuclear and nuclear-related activities. The AP
also requires the state to facilitate more extensive access
– complementary access, that is, access by IAEA
inspectors beyond places covered by routine safeguards
inspections.

The AP gives IAEA inspectors rights of complementary
access:

• on
  a "selective basis", to nuclear sites and certain
  nuclear-related locations, to establish the absence of
  undeclared nuclear activities; and
• at
  certain other nuclear-related locations, and importantly, anywhere in the state, where necessary to resolve a
  question relating to the correctness and completeness of
  information, or to resolve an inconsistency relating to that
  information.

National authorities need to have legislation and procedures
in place to ensure they can provide the access and obtain the
information which the IAEA may seek.

Some states have been concerned about the extent to which
they can be aware of the matters they should report to the
IAEA. This is a problem common to all – no state
can be absolutely sure of the activities of all its engineering
workshops, specialist manufacturers, and the like. On the
other hand, no one can afford to be complacent in this
area. The uncovering of the AQ Khan proliferation network
– which involved individuals and companies in our region
– has highlighted the need for governments to improve
oversight of nuclear and dual-use manufacturing and trading
activities.

The AP recognises practicalities by specifying inter
alia that the state is to use "every reasonable
effort" in providing information on nuclear-related
activities that are not specifically authorised or controlled
by the state. "Every reasonable effort"
requires that the state will try to obtain such information,
but the IAEA – and the international community at large
– recognise that identification of relevant activities
cannot be guaranteed. A state will not be considered to
have breached its commitments as long as it has in fact
exercised reasonable effort.

It is essential for national authorities to be proactive in
meeting the states' safeguards obligations. The
state is responsible for ensuring that all nuclear material and
activities are declared to the IAEA, so the state should have
in place both appropriate legislation and implementation
arrangements to counter the possibility of undeclared materials
or activities. As part of this, it is important for
national authorities to conduct regular outreach programs and
to maintain their awareness of relevant R&D sectors.

This is not only a matter of meeting safeguards
requirements, but is also mandated by the Security
Council. Security Council Resolution 1540 calls on every
UN member state to enforce effective measures to establish
domestic controls to prevent the proliferation of nuclear,
chemical, or biological weapons and their means of delivery,
including by establishing appropriate controls over
"related materials" (materials, equipment and
technology covered by multilateral treaties and
arrangements).

To this end states are required to establish and
enforce:

• laws criminalizing non-state nuclear, chemical, or biological
  (NBC) proliferation;
• security and accounting for NBC, their means of delivery, and
  related materials;
• border controls and law enforcement to block illicit
  trafficking;
• export controls and transhipment controls over NBC technology,
  materials and commodities.

In addition to the regulatory requirements outlined here,
national authorities and governments should consider how to
address transparency and confidence building issues such as
those touched on earlier in this paper.

6. Conclusions

At a time when the nuclear industry is poised for major
expansion worldwide, the non-proliferation regime is also
facing serious challenge, exemplified by the case of
Iran. The maintenance of an effective safeguards system
– requiring the cooperation of all states – has
never been more important. As one aspect of this, pursuit
of universalisation of the additional protocol should be a
priority for all safeguards supporters. Another aspect is
the need for national safeguards authorities to ensure they
have the necessary legislative powers, strategies, programs and
skills to meet their responsibilities towards the
non-proliferation regime.

On this last point, there are already a number of programs
for international and bilateral cooperation in training,
skills-building and sharing of experience. Australia, in
collaboration with Indonesia, is launching an initiative for a
regional safeguards association to build on these programs and
relationships.

Increasing attention is being given to the establishment of
a new international framework for the development of nuclear
energy, strengthening non-proliferation and broadening access
to the benefits of nuclear energy. With the Asia-Pacific
region looking to be a major growth area for nuclear energy,
not only will these international developments impact directly
on our region, but there may be benefit in looking at some
specifically regional arrangements. At one level, these
might involve cooperation between industry sectors. At
another level, they could involve development of transparency
and confidence-building mechanisms.

One thing's for certain, the coming decades will be
both challenging and immensely interesting for nuclear
professionals, especially non-proliferation/safeguards
specialists.