Next week, the International Atomic Energy Agency (IAEA) Board of Governors will be requested to "take note" of two reports by the Director General on "Assurance of Supply." One is a "Proposal for the Establishment of an IAEA Low Enriched Uranium (LEU) Bank"[1] and the other is about a "Russian Federation Initiative to Establish a Reserve of Low Enriched Uranium (LEU) for the Supply of LEU to the IAEA for its Member States."[2] The Board is not yet being asked to endorse these well-intentioned and potentially important proposals, but presumably it may be asked to do so in the future. Before it does, it should seek clarification of some important issues. Ideally, it should raise these issues at the same time as it "takes note" of the proposals.

As indicated in the Director General's proposal (§7) "the purpose of an LEU bank under Agency auspices would be to serve as a last resort to Member States in the event that their supplies of LEU are disrupted for reasons not related to technical or commercial considerations and the States fulfill the eligibility criteria..."

The document suggests (§ 17(b)) that "the Director General would assess the nature of the disruption." Whether the Director General is in a position to make such a determination is questionable. The IAEA has no knowledge of the commercial provisions contained in nuclear fuel contracts and it is not competent to make an authoritative judgment on whether or not these provisions have been met by either party. Typically, supply contracts stipulate that such a judgment should only be made by a three-judge arbitral tribunal, a procedure that can take months if not years.

If the purpose of the IAEA LEU bank is to "serve as a last resort," then it is implicit that the Director General would also have to confirm that the recipient Member State has been unable to procure substitute LEU on the market since that would be the normal first step to be taken. Would the Director General be in a position to do so?

1. Under the Director General's proposal it is foreseen that the supply from the bank would be only to a Member State "that has brought into force a safeguards agreement [with Subsidiary Arrangements] that applies to the LEU that would be supplied through the IAEA LEU bank" (§ 16(c)).

Since there is no reference to Comprehensive Safeguards Agreements (CSA), the fuel bank would also be made accessible to nuclear-weapon states and non-signatory states to the Nuclear Non-Proliferation Treaty (NPT), as long as the LEU is and remains under IAEA safeguards. This is different from the corresponding eligibility criteria under the Russian Federation Initiative, which limits the availability of its LEU guaranteed physical reserve to non-nuclear-weapon state members of the IAEA, "if the State has placed all of its peaceful nuclear activities under IAEA safeguards."[3]

2. The other eligibility criteria suggested in the Director General's proposal are:

• the Agency has drawn the conclusion in the most recent SIR [the annual Safeguards Implementation Report presented to the Board of Governors by the Secretariat] that "there has been no diversion of declared nuclear material"; and
   
• no specific report relating to the safeguards implementation in that Member State is under consideration by the Board of Governors.

The first condition is insufficient. In addition to stating that "there has been no diversion of declared nuclear material," it is important for the Agency to confirm, at a minimum, that it has no indication of undeclared nuclear material and activities in the state. Note that this is not the same as making the Additional Protocol a condition of eligibility as it is possible for the IAEA to find indications of undeclared nuclear material or activities in a state with just a CSA in force.

Also, if the IAEA found undeclared nuclear material in a state, say in 2005, which was thereafter placed under safeguards (as it should have been in the first place), it would report in the SIR that "there has been no diversion of declared nuclear material." Yet, the problem of undeclared material could still remain unresolved and a state in this position would not merit access to the fuel bank. Experience in the 1990s and this decade indicate the importance of detecting undeclared material and activities and building confidence that situations arising from such material or activities are promptly resolved.

In fact, it would be preferable to go further and make the Additional Protocol a condition of supply. Under the Russian Federation Initiative, which was reported to IAEA Member States in February and tabled on May 6, 2009, at the NPT Preparatory Committee for the 2010 Review Conference,[4] one of the eligibility criteria was that "the IAEA would have drawn a conclusion that all nuclear material had been accounted for." This condition implies that the recipient state has an Additional Protocol in force in conformity with the IAEA General Conference resolutions, and should therefore be welcomed.[5] Why does the Director General's report to the Board describing the Russian Federation Initiative no longer mention this as an "eligibility condition"? Have the Russian authorities changed their minds between May 6 and 21?

The way the second aforementioned condition is formulated is also inadequate. Indeed, if previously undeclared material and activities had been found by the IAEA in a state and reported only in the SIR but not in a "specific report" to the Board, the eligibility criteria would still be met. Yet, unresolved safeguards issues could be pending in that state. It would therefore be appropriate to add to the second condition that "the IAEA Secretariat has found no indication that, in its judgment, would give rise to a possible proliferation concern."

It is also remarkable that no nuclear security and safety requirements are part of the eligibility criteria. Is this reasonable?

These questions are among those which should be raised at the time the Board discusses and "takes note" of the two reports by the Director General on Assurance of Supply.

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Pierre Goldschmidt is nonresident senior associate at the Carnegie Endowment for International Peace, and former Deputy Director General of the International Atomic Energy Agency, Head of the Department of Safeguards.

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Notes

1. IAEA GOV/2009/30, May 20, 2009.

2. IAEA GOV/2009/31, May 21, 2009.

3. which means the Member State has a CSA in force.

4. "Development of the Initiative of the Russian Federation to Establish a Reserve of Low Enriched Uranium (LEU) for the Supply of LEU to the International Atomic Energy for its Member States," Working paper submitted by the Russian Federation, NPT/CONF.2010/PC.III/WP.25, May 6, 2009.

5. In a resolution adopted on October 4, 2008, the IAEA General Conference “Requests all concerned States and other Parties to safeguards agreements, including nuclear-weapon States, that have not yet done so to promptly sign additional protocols and to bring them into force as soon as possible, in conformity with their national legislation."