Order Code RS21592
Updated January 14, 2005
CRS Report for Congress
Received through the CRS Web
Iran’s Nuclear Program:
Recent Developments
Sharon Squassoni
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Summary
Inspections in 2003 and 2004 of Iran’s nuclear program revealed significant
undeclared activities with potential application for nuclear weapons. The International
Atomic Energy Agency (IAEA) uncovered two uranium enrichment programs
(centrifuges and lasers) and plutonium separation efforts. Iran has been pressured to
give up its enrichment and reprocessing activities and has declared twice (November
2003 and November 2004) that it would halt all such activities in exchange for technical
cooperation with Germany, France, and the UK. It is not clear whether Iran is buying
time for a clandestine program or effectively using its program as a bargaining chip for
wider economic gain. Iran signed an Additional Protocol to its safeguards agreement
in December 2003, but has not yet ratified it. Ever on the brink of being declared in
violation of the NPT, Iran has allowed IAEA inspectors access only when pressed. After
several months, Iran recently agreed to let inspectors visit a military site: Parchin. This
report, which is updated as needed, analyzes the significance of the IAEA’s findings for
a possible Iranian nuclear weapons program.
Background
Iran has had a nuclear program for close to 50 years, beginning with a research
reactor purchased from the United States in 1959. The Shah’s plan to build 23 nuclear
power reactors by the 1990s may have been regarded as grandiose, but was not necessarily
viewed as a “back door” to a nuclear weapons program, possibly because Iran then did not
seek the technologies to enrich its own fuel or reprocess its own spent fuel.1 There were
a few suspicions of a nuclear weapons program, but these abated in the decade between
the Iranian 1979 revolution and the end of Iran-Iraq war, both of which brought a halt to
1 However, there were reports that Iran’s AEOI sought laser enrichment technology in the United
States in the late 1970s, and that reprocessing-related experiments were conducted. In addition,
there were intelligence reports that the Shah had a secret group to work on nuclear weapons. See
Leonard S. Spector, Nuclear Ambitions (Colorado: Westview Press), 1990, p. 204.
Congressional Research Service ˜ The Library of Congress

---

CRS-2
nuclear activities. Iran’s current plans — to construct nuclear power plants with a total
capacity of 6000MW within two decades — are still ambitious, and some question the
need for nuclear power in a state with considerable oil and gas reserves. Iran argues, as
it did in the 1970s, that nuclear power is necessary in the context of rising domestic
energy consumption rates and a desire to preserve oil and gas to generate foreign
currency. Recently, however, Iran’s stated intention to explore fuel cycle, safety, and
waste management technology, which include sensitive fissile material production
capabilities, has elevated concern about possible nuclear weapons production.
In May 2003, the Iranian officials stated that “we consider the acquiring,
development and use of nuclear weapons inhuman, immoral, illegal and against our basic
principles. They have no place in Iran’s defense doctrine.”2 On August 6, 2003 President
Khatami stated that Iran “cannot use such weapons based on our Islamic and moral
teachings,” but that Iran would not give up nuclear technology for power generation.3 Iran
has asserted that its nuclear program is strictly peaceful, but few observers believe that
such an ambitious program is necessary or economic for a civilian nuclear fuel cycle like
Iran’s. In mid-February 2004, Iran announced it planned to sell nuclear fuel abroad.4
The United States has had longstanding concerns about Iran’s intentions to develop
nuclear weapons, focusing in the last decade primarily on what Iranians might learn
through Russian help on the Bushehr nuclear reactor project. Despite U.S. attempts to
impose an international embargo on nuclear cooperation with Iran since the 1980s, Iran
acquired significant help in uranium enrichment technologies, including from Pakistan.
In 2002, the National Council of Resistance of Iran (NCR) helped expose Iran’s
undeclared nuclear activities by providing information about nuclear sites at Natanz
(uranium enrichment) and Arak (heavy water production). Iran was forced to inform the
IAEA about its nuclear fuel cycle activities, and then permit inspections. Subsequent
inspections have revealed significant undeclared Iranian efforts in uranium enrichment
(including centrifuge, atomic vapor laser isotope separation and molecular laser isotope
separation techniques), significant foreign suppliers of technology, separation of
plutonium, and undeclared imported material. Under Iran’s full-scope safeguards
agreement, many of these activities were not required to be declared. An Additional
Protocol agreement (which Iran signed on December 18, 2003) would require such to be
declared.
What inspections revealed
Iranian officials clearly have not been forthcoming about the extent of their nuclear
program (especially compared to Libya’s cooperation with the IAEA since December
2003). Iran has revealed information and allowed access in piecemeal fashion.
Inspections through June 2003 revealed various reporting failures on Iran’s part (including
2 Statement by H.E. Mr. G. Ali Khoshroo, Deputy Foreign Minister for Legal and International
Affairs, Second Session of the Prepcom for the 2005 NPT Review Conference, April 29, 2003.
3 “Iran Denies It’s Building Nuclear Bomb,” Associated Press, August 7, 2003.
4 This may have been an attempt to justify its uranium enrichment capability; it is not clear how
profitable such a plan might be. See “Iran Announces Plans to Sell Nuclear Fuel,” Washington
Post, February 16, 2004.

---

CRS-3
failure to report uranium imported from China in 1991) and raised serious questions,
particularly about how Iran was able to advance to a production stage of centrifuge
enrichment without having introduced nuclear material into the process (which would
need to be declared to the IAEA).5 Overall, the existence of undeclared uranium was a
red flag, since it could allow Iran to experiment with processes relevant to a nuclear
weapons program.6 In fact, Iran converted some uranium into metal, and used other
uranium in various processing experiments, including isotope production and purification
and conversion processes. Some of these processes are relevant to plutonium
reprocessing (e.g., dissolution in nitric acid and separation in a pulse column).7 Prior to
the September 2003 IAEA Board meeting, Iran admitted it had conducted “bench scale”
uranium conversion experiments a decade ago, which should have been declared under
its safeguards agreement. In October 2003, Iran admitted that it used, for those
experiments, some safeguarded material that had been declared lost in other processes (a
safeguards violation). After inspections in January 2004, the IAEA concluded that,
“given the size and capacity of the equipment used, the possibility cannot be excluded that
larger quantities of nuclear material could have been involved than those declared by
Iran.”8 The IAEA also has investigated Iran’s explanations for why it converted uranium
into metal. In October 2003 Iranian officials said it was produced for shielding material;
Iranian officials later admitted it was used in a laser enrichment project.
Much concern has focused on the two centrifuge enrichment plants at Natanz.9 The
pilot fuel enrichment plant started up in June 2003 but shut down again after Iran decided
to halt enrichment activities in December 2003. The commercial-scale plant was under
construction, which presumably also has halted. The pilot facility eventually will have
about 1000 centrifuges installed, while the commercial-scale plant is planned to have
50,000 centrifuges. These plants are built partly underground, raising concerns about the
transparency of Iran’s program.
A key question early on was whether Iran had introduced uranium gas (process gas,
or UF6) into its pilot-scale plant; the slight enrichment of uranium that would have
resulted would have been a safeguards violation if undeclared. Iranian officials first told
the IAEA that their program experienced too many difficulties to conduct experiments
with process gas and they attributed the presence of highly enriched uranium (HEU)
particles at the Natanz pilot plant in the summer of 2003 to contamination from foreign-
origin centrifuge assemblies. However, this explanation became technically less credible
when analysis of the sample showed different levels of enrichment at different locations,
and that domestically manufactured components showed 36% low-enriched uranium
5 Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran, Report by
the Director General, GOV/2003/40, June 6, 2003.
6 Iran imported, but did not declare, 1800 kilograms of natural uranium in different forms:
uranium hexafluoride (UF6), which is used in centrifuge enrichment; uranium tetra fluoride
(UF4); and uranium oxide (U02).
7 Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran, Report by
the Director General, GOV/2003/75, November 10, 2003.
8 IAEA Director General’s Report, Implementation of the NPT Safeguards Agreement in the
Islamic Republic of Iran, Report by the Director General, GOV/2004/11, February 24, 2004.
9 See website, [http://www.isis-online.org] for satellite photos of the enrichment plant.

---

CRS-4
(LEU) contamination, when Iran had admitted just to 1.2% enrichment. In addition, other
sampling revealed UF6 contamination at the Tehran research reactor. In October 2003,
Iranian officials admitted they tested centrifuges at the Kalaye Electric Company using
UF6 between 1998 and 2002. The IAEA has not yet fully resolved the issue of the varied
levels of enrichment at Natanz.
Iran also has been slow in revealing two other developments related to enrichment
— the existence of more sophisticated centrifuge designs (using maraging steel or
composite rotors) and the laser enrichment program. Although Iran provided significant
detail about the P-1 centrifuges in its October 2003 declaration, it did not admit until
asked by the IAEA in January 2004 that it possessed more advanced centrifuge designs
(P-2). In light of Libya’s admission that Pakistan supplied it with P-2 centrifuge designs,
Iran’s possession of P-2 designs is not surprising. Iran offered several explanations for
why it did not reveal this information in October, although the IAEA has cast doubt on
the credibility of those explanations. Iran also did not admit until October 2003 that it
also pursued a laser enrichment program beginning in the 1970s, focusing on two
techniques — atomic vapor laser isotope separation (AVLIS) and molecular laser isotope
separation (MLIS). The IAEA continues to study this development.
The heavy water program also has raised questions about Iran’s intentions.
Reportedly, Iran first told the IAEA that it planned to produce heavy water for export, but
then told the Agency in May that the heavy water would be used as a coolant and
moderator for a planned research reactor for research and development, radioisotope
production, and training. Subsequently, Iran’s design information for the facility omitted
necessary hot cell equipment for producing radioisotopes. The Agency has asked Iran to
clarify this issue, given reports of efforts by Iran to import hot cell equipment.
In October 2003, Iran revealed that it had conducted plutonium reprocessing
experiments in a hot cell at the Tehran Nuclear Research Center and estimated the amount
separated as 200 micrograms. The IAEA calculated that more plutonium would have
been produced (about 100g) and Iran admitted in May 2004 that it understated the
amount. Inspections also revealed that Iran experimented in irradiating bismuth, which
can be used to produce Polonium-210 for civilian purposes (for nuclear batteries) or in
conjunction with beryllium to create a neutron initiator for a nuclear weapon. These
experiments were conducted between 1989 and 1993. Polonium, it should be noted, is
not ideal for nuclear weapons purposes, according to many observers.
IAEA Board of Governors Actions
The IAEA Board of Governors has resisted pressure to call Iran in violation of its
NPT obligations. In light of discrepancies revealed in inspections through June 2003, the
Board adopted the following resolutions in September 2003: calling on Iran to comply
with its safeguards agreement; suspend all further uranium enrichment and reprocessing
activities; resolve all outstanding issues; sign, ratify and implement the Additional
Protocol; and be transparent and cooperative with the IAEA. The Board also set a
deadline for compliance of October 31, which set in motion negotiations between Iran and
EU foreign ministers (Germany, France, UK). Initially, the EU ministers agreed that once
international concerns were fully resolved, Iran “could expect easier access to modern

---

CRS-5
technology and supplies in a range of areas.”10 Iran declared that it would sign the NPT
Additional Protocol and suspend all uranium enrichment and “processing activities.”
Specifically, on December 29, 2003, Iran informed the Agency that it would:
! suspend operation and/or testing of centrifuges at the pilot plant;
! suspend the further introduction of any nuclear material into any
centrifuges;
! suspend installation of new centrifuges at the pilot plant and at Natanz;
! withdraw nuclear material from any centrifuge facility if and to the extent
practicable.11
During the period of suspension, Iran said it did not “intend to make new contracts for the
manufacture of centrifuge machines and their components;” that the Agency could
supervise the storage of machines assembled during that period; that it had dismantled its
laser enrichment projects and that it was not constructing or operating any plutonium
separation facility. However, reports surfaced that Iran was continuing to assemble
centrifuges, and many observers felt Iran had not lived up to its part of the bargain. On
February 24, 2004, Iran stated it would “suspend the assembly and testing of centrifuges
and suspend the domestic manufacture of centrifuge components, including those related
to existing contracts.”12
The IAEA issued a report on February 24, 2004, which was considered by the Board
of Governors in March. It noted that Iran had been actively cooperating with the Agency,
including providing access to workshops at military sites. However, Iran omitted any
mention of advanced centrifuge designs (P-2) in its October 2003 declaration, and the
Agency was not able to resolve the major outstanding issue of LEU and HEU
contamination at Kalaye and Natanz. Between February and June 2004, the IAEA
attempted to verify Iran’s pledges to suspend activities. Its June 2004 report assessed that
Iran had delayed inspections at the Natanz pilot scale enrichment plant; Iran had not
suspended UF6 production or domestic production of centrifuge components; and Iran
had not previously declared the procurement of 4000 magnets (and orders for more) for
P-2 centrifuges.13
The Board’s most recent report, GOV/2004/83 dated November 15, 2004, notes that
Iranian cooperation has improved since October 2003. The Board thus far has not
reported Iran as violating its safeguards agreement, which requires reporting to the UN
Security Council and General Assembly. Since September 2003, U.S. officials have
maintained that “the facts already established would fully justify an immediate finding of
noncompliance by Iran with its safeguards obligations.”14 In November 2003, the Board
10 “Statement by the Iranian Government and visiting EU Foreign Ministers,” Reuters, October
21, 2003.
11 GOV/2004/11, February DG’s report on Iran, p. 10.
12 ibid.
13 IAEA Director General’s Report, Implementation of the NPT Safeguards Agreement in the
Islamic Republic of Iran, Report by the Director General, GOV/2004/34, June 1, 2004.
14 Statement of Ambassador Kenneth Brill at September 2003 IAEA Board of Governors
(continued...)

---

CRS-6
adopted a resolution which stated that “should any further serious Iranian failures come
to light, the Board of Governors would meet immediately to consider, in light of the
circumstances and of advice from the Director General, all options at its disposal, in
accordance with the IAEA Statute and Iran’s Safeguards Agreement.”15 The June 18,
2004, Board of Governors resolution (GOV/2004/49) noted with concern continuing
discrepancies about HEU contamination and the nature of the P-2 centrifuge program and
called upon Iran to halt UF6 production and planned construction of the research reactor
designed to use heavy water, but did not call these serious Iranian failures. The resolution
noted the Board would remain seized of the matter.
Significance for a nuclear weapons program

Nuclear safeguards are fundamentally accounting procedures to ensure that material
is not diverted to weapons uses. Therefore, failures to report material can be significant,
but some failures are more significant than others. Iran has stated that “The failures...are
minor, and are only on the order of the gram or milligram.”16 A discrepancy in accounting
for large quantities of weapons-grade plutonium or highly enriched uranium would
certainly be more significant for a nuclear weapons program than a discrepancy for
smaller quantities or for other materials like natural uranium. However, some argue that
a pattern of deception is significant. In part, a principle underlying strengthened
safeguards is the evolution from a strict accounting approach (seeing the “trees”) to
evaluating the program in its entirety (seeing the “forest”).
IAEA reports indicate that Iran has pursued two different methods for uranium
enrichment and that it experimented with separating plutonium. Although Iran is years
away from producing quantities of fissile material (highly enriched uranium or plutonium)
that it could use in nuclear weapons, the steady accrual of expertise in weapons-relevant
areas is viewed with concern by many. In the run-up to the next Board decision on
whether or not Iran has violated its safeguards agreement, a key factor may be whether
Board members feel that the enhanced inspections under the Additional Protocol will be
enough to keep any potential nuclear weapons ambitions by Iran in check. Iran’s recent
agreement to allow inspectors to visit Parchin, a military site, may provide a glimpse of
whether expanded inspections under the Additional Protocol are useful. Thus far, it
appears that more rigorous IAEA inspections with wider access have provided a wealth
of data about Iran’s efforts. A broader question is whether Iran is pursuing delaying
tactics to buy time for a nuclear weapons program, given its on-and-off suspension of
activities, or whether it is pursuing a strategy to elicit the greatest advantage for truly
giving up sensitive nuclear capabilities.
14 (...continued)
Meeting.
15 Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran, Resolution
adopted by the Board on November 26, 2003, GOV/2003/81.
16 “After Report, Iran Acknowledges ‘Minor’ Breach of Nuclear Pact,” Washington Post,
November 12, 2003.

---