The five nuclear weapon states that are parties to the NPT—China, France, the Russian Federation, the United Kingdom, and the United States—are not obligated by the NPT to accept IAEA safeguards but have voluntarily submitted designated materials and facilities to IAEA safeguards inspections to signal to the non-nuclear weapon states their willingness to share in the administrative and commercial costs of safeguards. IAEA expects that changes to strengthen its safeguards program will enhance its capability to detect clandestine or undeclared nuclear activities in non-nuclear weapon states. This new protocol supplements member states’ safeguards agreements and will give the Agency new authority to collect information and conduct inspections. While IAEA has conducted some preliminary planning for implementing certain aspects of the new system, IAEA does not know whether in the long run it can implement the new system with existing resources because it has not developed a long-term plan that (1) identifies the total resource requirements for implementing the new measures, (2) provides an implementation schedule with milestones for equipment and estimated projections for adoption of the Additional Protocol, or (3) establishes criteria for assessing the effectiveness of the new measures and whether they could be used to reduce inspection efforts. However, IAEA’s assumptions about the extent of cost savings may not materialize. IAEA has limited options for funding the new, Strengthened Safeguards System as long as its regular budget is held to zero real growth and competing funding priorities and political constraints inhibit reallocation of resources. The future effectiveness of IAEA’s safeguards depends on whether IAEA will receive sufficient legal and financial support from its member states to permit full implementation of the new safeguards measures and how well the Agency implements changes to strengthen its ability to detect clandestine nuclear activities in countries with treaty obligations not to develop nuclear weapons. We recognize that the Additional Protocol will be implemented differently than the existing safeguards system. We believe that a long-term implementation plan for the Strengthened Safeguards System is valuable for several reasons. We recognize that State’s concerns need to be addressed, but we believe that reevaluating the zero-real growth policy for IAEA and the one-for-one balance between IAEA’s safeguards and technical cooperation programs could (1) provide a more stable funding basis for the safeguards program while the Agency is implementing the Strengthened Safeguards System and (2) reduce IAEA’s reliance on extrabudgetary contributions from the United States. Scope and Methodology

To describe changes IAEA is undertaking to strengthen its safeguards program and to assess the reasonableness of IAEA’s assumptions regarding the impact of these changes on program costs and efficiency, we visited IAEA headquarters in Vienna, Austria, in October and November 1997.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed: (1) changes the International Atomic Energy Agency (IAEA) is undertaking to strengthen its safeguards program; (2) the reasonableness of IAEA's assumptions regarding the impact of these changes on program costs and efficiency; and (3) comments on the extent of IAEA's reliance on the United States to finance the Agency's safeguards activities.

What GAO Found

GAO noted that: (1) in response to Iraq's secret nuclear weapons program, the international community, led by the United States, launched an intensive effort to create a new capability within the IAEA's safeguards system to detect secret or undeclared activities; (2) IAEA is beginning to implement a strengthened safeguards system by introducing advanced safeguards techniques under its existing safeguards agreements; (3) it is also seeking additional rights to conduct more intrusive inspections and collect information on nuclear activities through an Additional Protocol that supplements the existing safeguards agreements; (4) IAEA's changes to its safeguards systems are intended to give its inspectors greater ability to detect clandestine nuclear activities in non-nuclear weapons states that are signatories to the Non-Proliferation of Nuclear Weapons or other regional nonproliferation treaties; (5) under existing safeguards agreements with states and regional organizations, IAEA has increased its access to information on all nuclear activities at declared facilities in non-nuclear weapons states; (6) IAEA's member states expect that the Agency will implement the strengthened safeguards system through cost neutrality, that is, through savings from expected future efficiency gains and cutbacks on certain types of inspections that on an annual basis offset the cost increases resulting from implementation; (7) while IAEA has performed some preliminary planning, it does not have a long-term implementation plan that: (a) identifies the total resource requirements for implementing the new measures; (b) provides an implementation schedule with milestones for equipment and estimated projections of adoption of the Additional Protocol; and (c) provides criteria for assessing the effectiveness of the new measures and their usefulness for reducing inspection efforts; (8) IAEA has limited options for funding the new Strengthened Safeguard System because of the practice, imposed by its major contributors, that limits the Agency's regular budget to zero-real growth, and by the Agency's practice, insisted on by IAEA's less developed member states, of maintaining a balance between IAEA's technical cooperation and its safeguards programs; and (9) as a result, if these constraints continue and IAEA's assumptions about cost neutrality for the new program are not borne out by experience, IAEA will likely turn to the United States for substantial voluntary extrabudgetary contributions to implement the Strengthened Safeguards System.