Order Code RS21592
Updated October 3, 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
On September 24, 2005, the International Atomic Energy Agency (IAEA) Board
of Governors found Iran to be in non-compliance with its Nuclear Nonproliferation
Treaty (NPT) safeguards agreement. The Board’s resolution, GOV/2005/77, did not
immediately refer Iran to the United Nations Security Council, leaving room for further
negotiations. IAEA inspections of Iran’s nuclear program since 2003 have revealed
significant undeclared activities with potential application for nuclear weapons,
including uranium enrichment facilities and plutonium separation efforts. Iran’s actions
to conceal activities over two decades and restrict access for IAEA inspectors has eroded
international confidence in Iran’s peaceful intentions. Iran agreed to suspend its
enrichment and reprocessing activities in exchange for promises of assistance from
Germany, France, and the UK (EU-3), but negotiations broke down in August 2005,
leading to the Board’s decision. This report will be updated as needed.
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 was regarded as grandiose, but not necessarily viewed as a
“back door” to a nuclear weapons program, possibly because Iran did not then seek the
technologies to enrich or reprocess its own 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 nuclear activities.
Iran’s current plans — to construct seven nuclear power plants (1000 MW each) by 2025
1 However, there were reports that Iran sought laser enrichment technology in the United States
in the late 1970s, and conducted reprocessing-related experiments. 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

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— are still ambitious, particularly for a state with considerable oil and gas reserves.2 Iran
argues, as it did in the 1970s, that nuclear power is necessary for rising domestic energy
consumption, while oil and gas are needed to generate foreign currency. Few observers
believe that such an ambitious program is necessary or economic for Iran, including the
United States.
Iran has asserted repeatedly that its nuclear program is strictly peaceful, stating in
May 2003 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.”3 Iranian officials have also insisted on their right to develop peaceful
uses of nuclear technology. President Khatami stated in March 2005 that ending Iran’s
uranium enrichment program is “completely unacceptable,” but that Iran would provide
“objective guarantees” of the peaceful uses of enrichment. Uranium enrichment can be
used for both peaceful (nuclear fuel) and military (nuclear weapons) uses. At the heart
of the debate lies two issues: doubt about Iran’s intentions, magnified by revelations of
almost two decades of clandestine activities, and whether the international community can
adequately verify compliance at enrichment facilities or should further restrict access to
sensitive nuclear technologies.
What Inspections Revealed
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). In three years of intensive
inspections, the IAEA has revealed significant undeclared Iranian efforts in uranium
enrichment (including centrifuge, atomic vapor laser isotope separation and molecular
laser isotope separation techniques) and separation of plutonium, as well as undeclared
imported material. Iranian officials have delayed inspections, changed explanations for
discrepancies, cleaned up facilities and in one case, Lavizan-Shian, razed a site.4
According to IAEA Director General Mohamed ElBaradei, “Iran tried to cover up many
of their activities, and they learned the hard way.”5 Only in January 2005 did Iranian
officials share a copy of Pakistani scientist A.Q. Khan’s 1987 offer of a centrifuge
enrichment “starter kit.”6
Iran admitted in 2003 it conducted “bench scale” uranium conversion experiments
in the 1990s (required to be reported to the IAEA) and later, admitted that it used for those
experiments some safeguarded material that had been declared lost in other processes (a
safeguards violation). In February 2004, the IAEA concluded that, “given the size and
capacity of the equipment used, the possibility cannot be excluded that larger quantities
2 See statement by Iran’s Foreign Minister Kamal Kharrazi at [http://www.pbs.org/newshour/bb/
middle_east/july-dec04/iran_9-27.html].
3 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, Apr. 29, 2003.
4 David Albright and Corey Hinderstein, “Iran: Countdown to showdown,” Bulletin of Atomic
Scientists, Nov./Dec. 2004, vol. 60, no. 6.
5 “Iran Was Offered Nuclear Parts,” Washington Post, Feb. 27, 2005.
6 Ibid.

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of nuclear material could have been involved than those declared.”7 The IAEA has
deemed credible Iran’s explanation that it needed to convert uranium into metal for its
laser uranium enrichment program (revealed only in October 2003).
Enrichment Activities. Inspections revealed two enrichment plants at Natanz —
a pilot-scale facility(planned to have 1000 centrifuges) and a commercial-scale plant under
construction (planned to have 50,000 centrifuges). The pilot-scale plant started up in June
2003 only to shut down after Iran suspended enrichment activities in December 2003.
Construction on the commercial-scale plant has also been suspended. The plants are built
partly underground, raising concerns about intentions.
Several questions have been raised in connection to those plants in the course of
inspections:
! Did Iran introduce uranium gas (process gas, or UF6) into the pilot-scale
plant? If so, the slight enrichment of uranium that would have resulted
would have been a safeguards violation if undeclared. Iranian officials
told the IAEA that it was too difficult to use process gas, but that Iran was
able nonetheless to advance to a production stage of centrifuge
enrichment.8
! Where did the highly enriched uranium (HEU) particles come from?
Iranian officials asserted that HEU particles found at the Natanz pilot
plant in 2003 were contaminants from foreign centrifuge assemblies, a
first clue revealing the Pakistani A.Q. Khan network as a supplier to Iran.
Iran admitted to enriching uranium to just 1.2%, while the particles
sampled ranged from 36% to 70% U-235 enrichment. In October 2003,
Iranian officials admitted they tested centrifuges at the Kalaye Electric
Company using UF6 between 1998 and 2002.
! Why did Iran keep other information hidden? Iran was slow to reveal the
existence of more sophisticated centrifuge designs (using maraging steel
or composite rotors) and its laser enrichment program. Iran did not admit
that it possessed more advanced centrifuge designs (P-2) until asked by
the IAEA in January 2004. 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 also did not admit until October 2003 that it also
pursued a laser enrichment program beginning in the 1970s, focusing on
two techniques.9
Plutonium-Related Activities. 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 between 1989 and 1993 on irradiating bismuth, which can be used to
7 Iran, Report by the Director General, GOV/2004/11, Feb. 24, 2004.
8 Iran, Report by the Director General, GOV/2003/40, June 6, 2003.
9 “Iran Said To Be Stepping Up Effort to Support Laser Enrichment Program, Nuclear Fuel,
October 5, 1998.

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produce Polonium-210 for civilian purposes (for nuclear batteries) or in conjunction with
beryllium to create a neutron initiator for a nuclear weapon. However, polonium,
according to many observers, is not ideal for nuclear weapons purposes.
The heavy water program also has raised questions about Iran’s intentions. Iran first
told the IAEA that it planned to export heavy water, then told the Agency that the heavy
water would be used as a coolant and moderator for a planned IR-40 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, which the Agency asked Iran to clarify, given reports of Iranian efforts to
import hot cell equipment. Construction of the heavy water reactor continued into 2005,
despite the Board’s call for a halt in 2004. The foundation of the reactor has been poured,
and the heavy water production plant may soon produce heavy water.10
Significance for a Nuclear Weapons Program

Iran is likely years away from producing weapons-grade plutonium or highly enriched
uranium. Vice Adm. Jacoby, director of the Defense Intelligence Agency, told the Senate
Armed Services Committee in March 2005 that Iran is expected to be able to produce a
weapon early next decade. According to one report, the new National Intelligence
Estimate on Iran assesses that it will be ten years before Iran has a bomb.11 That said, Iran
has pursued three different methods of enriching uranium and has experimented with
separating plutonium, suggesting a steady accrual of expertise in weapons-relevant areas,
according to some observers. If Iran received the same nuclear weapon design that A.Q.
Khan gave Libya, the remaining technical hurdle (albeit the most difficult) would be fissile
material production. A key challenge is verifying that there are no undeclared enrichment
facilities or capabilities. Although some NPT members may feel that enhanced
inspections under the Additional Protocol will be enough to verify compliance, others feel
that access to enrichment and reprocessing technologies must be restricted.
Some observers are concerned about the potential for the Bushehr and the
heavy-water-moderated IR-40 reactors to be used for clandestine plutonium production.
In addition to IAEA safeguards on these reactors, Iran must also send Bushehr’s spent fuel
back to Russia for disposal under a 2005 agreement, which according to some observers,
could provide further assurances of non-diversion.
NPT Compliance Issues
NPT compliance is, fundamentally, compliance with a safeguards agreement, which
is the legal document between the IAEA and a member state. Assessing compliance is
rarely black and white; there are myriad opportunities for technical discrepancies that
mostly do not rise to the level of noncompliance. Often, a state’s willingness to take
corrective action weighs heavily in its favor. In the case of Iran, there have clearly been
many technical violations, but negotiations have proceeded since 2003 not just with IAEA
inspectors and the Board of Governors, but also through an additional route of three
10 For analysis, see [http://www.isis-online.org/publications/iran/arakconstruction.html].
11 “Iran is Judged 10 Years From Nuclear Bomb,” Washington Post, August 2, 2005.

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European foreign ministers, known as the EU-3. Iran made important concessions, such
as signing the Additional Protocol, and agreeing to a voluntary suspension of enrichment
and reprocessing-related activities. Some observers would argue that in the absence of a
finding of noncompliance, however, Iran has been free to set the terms of engagement,
since its concessions were voluntary and political in nature.
Since October 2003, the foreign ministers of Germany, France, and the UK (EU-3)
negotiated with Iran on restricting its nuclear program in exchange for wide-ranging
assistance. Negotiations thus far have failed to obtain Iran’s agreement on a key objective
— a permanent halt to uranium enrichment activities. In March 2005, Iran proposed
running its pilot-scale enrichment facility, which EU-3 negotiators rejected. In April 2005,
Iran said it would start-up its uranium conversion plant unless negotiations progressed.
A top Iranian negotiator told the press that the EU “would have to offer significant
incentives like a deal for 10 nuclear reactors.”12 Iran demanded a new negotiating proposal
by July 31, but the EU-3 delayed, arguing that the incoming Iranian president would be
better able to respond in August. On August 1, Iran informed the IAEA it would resume
uranium conversion, stating that since uranium conversion was not considered by the
IAEA to be enrichment, this would not violate its voluntary suspension.13
In light of Iran’s rejection of the latest EU-3 proposal and the re-start of the uranium
conversion plant, EU-3 negotiators approached the Board of Governors to consider
referring Iran to the UN Security Council. The resultant August Board of Governors
resolution called on Iran to cooperate once more. However, by September, the Board
voted on resolution GOV/2005/77, which found Iran in non-compliance with its
safeguards agreement. The resolution is notable for at least two reasons: it was not passed
by consensus (which is the Board norm) and did not immediately refer the issue to the
Security Council. Venezuela voted against it and 12 countries abstained from the
resolution, which called for Iran again to help resolve outstanding questions.14 The IAEA
Statute requires that once the Board has made a finding of non-compliance, it must report
it to the Security Council. The resolution noted that the Board would address “the timing
and content of the report required under Article XII.C [of the Statute]”. For practical
purposes, this could be addressed at the next Board meeting in November 2005, or if a
crisis erupts, earlier.
Since 2003, the United States has maintained that “the facts already established
would fully justify an immediate finding of noncompliance by Iran with its safeguards
12 “Iran Seeks Incentives from Europe in Nuclear Impasse,” New York Times, May 19, 2005.
13 INFCIRC/648, Communication dated 1 August 2005 received from the Permanent Mission of
the Islamic Republic of Iran to the Agency. Available at [http://www.iaea.org]
14 According to the Tehran Times, the United States, Australia, Britain, France, Germany,
Canada, Argentina, Belgium, Ghana, Ecuador, Hungary, Italy, the Netherlands, Poland, Portugal,
Sweden, Slovakia, Japan, Peru, Singapore, South Korea, and India voted for the resolution;
Pakistan, Algeria, Yemen, Brazil, China, Mexico, Nigeria, Russia, South Africa, Sri Lanka,
Tunisia, and Vietnam abstained, while Venezuela voted against the resolution. “International
Consensus Against Iran Fails,” Tehran Times, Sept. 25, 2005.

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obligations.”15 According to the IAEA Statute, if inspectors find a state in noncompliance
with its safeguards agreement, they report that to the Director General, who informs the
Board of Governors. In the case of Iran, the DG did not declare Iran to be in
noncompliance with its safeguards agreement, despite numerous discrepancies, but
concluded in September 2005, according to GOV/2005/67. that “The Agency is, however,
still not in a position to conclude that there are no undeclared nuclear materials or
activities in Iran.”16 This opened the way for the Board of Governors to make a
noncompliance finding.17
Some Iranian media have portrayed the September 24 Board resolution as a victory,
indicating that there is no consensus on Iran’s noncompliance with the NPT. While few
observers are likely to share that overly optimistic assessment, it is unclear how quickly
Iran may be referred to the UN Security Council, or what action the Security Council
might take, given the political divisions on how to proceed forward with Iran’s
noncompliance. Two abstaining Board members were Russia and China, both with veto
power on the Security Council. Some observers have remarked that the finding of
noncompliance was relatively straightforward, since the number and substance of
violations were fairly irrefutable, but that it may be more difficult to agree on the next
steps.
15 Statement of Ambassador Kenneth Brill at September 2003 IAEA Board of Governors
Meeting.
16 GOV/2005/67, Implementation of the NPT Safeguards Agreement in the Islamic Republic of
Iran, Report by the Director General, Sept. 2, 2005, derestricted Sept. 24, 2005.
17 For text of the Statute, see [http://www.iaea.org/About/statute_text.html#A1.12].

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