Order Code RS21592
Updated February 9, 2007
Iran’s Nuclear Program:
Recent Developments
Sharon Squassoni
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Summary
International Atomic Energy Agency (IAEA) inspections since 2003 have revealed
two decades’ worth of undeclared nuclear activities in Iran, including uranium
enrichment and plutonium separation efforts. Iran agreed in 2003 to suspend sensitive
activities in negotiations with Germany, France, and the UK (EU-3), which broke down
in August 2005. On September 24, 2005, the IAEA Board of Governors found Iran to
be in noncompliance with its Nuclear Nonproliferation Treaty (NPT) safeguards
agreement and reported Iran’s case to the U.N. Security Council in February 2006. The
Security Council called upon Iran to resuspend enrichment and reprocessing, reconsider
construction of its heavy water reactor, ratify and implement the Additional Protocol,
and implement transparency measures. Iran has continued its enrichment activities,
failing to meet deadline after deadline. The Security Council passed UNSCR 1696 on
July 31, 2006, and on December 23, 2006, the Security Council adopted limited
sanctions under UNSCR 1737. The next deadline is February 23, 2007. 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 the Iran-Iraq war, both of which brought a halt to nuclear
1 Reports in the 1970s indicated that Iran sought laser enrichment technology in the United States
and conducted reprocessing-related experiments. Intelligence reports suggested that the Shah had
a secret group to work on nuclear weapons. See Leonard S. Spector, Nuclear Ambitions
(Colorado: Westview Press, 1990), p. 204.

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activities. Iran’s current plans — to construct seven nuclear power plants (1000 MW
each) by 2025 — 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.
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 government spokesman Gholam Hussein Elham said in July
2006 that the Islamic Republic will never produce weapons of mass destruction. At the
same time, Supreme Leader Ali Khamanei said in November 2004 that Iran would not
“give up” its enrichment “at any price” and former President Khatami stated in March
2005 that ending Iran’s uranium enrichment program is “completely unacceptable.”
Uranium enrichment can be used for both peaceful (nuclear fuel) and military (nuclear
weapons) uses. However, two decades of clandestine activities have raised questions
about Iran’s intentions, and Iran’s use of centrifuge enrichment technology makes
detection of clandestine enrichment very difficult. In fact, the preferred approach to
rebuilding world confidence in Iran since 2003 has been to persuade Iran to suspend
enrichment and reprocessing, perhaps indefinitely.
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). Three years of intensive
inspections by the IAEA revealed significant undeclared Iranian efforts in uranium
enrichment (including centrifuge, atomic vapor laser 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
Among other activities, 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). Iranian officials told the IAEA
only in January 2005 of Pakistani scientist A.Q. Khan’s 1987 offer of a centrifuge
2 See statement by Iran’s former 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.

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enrichment “starter kit.”6 In November 2005, Iran finally admitted that the Khan network
supplied it with information on casting and machining parts of nuclear weapons.7
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. Since February 2006, when Iran resumed enrichment-related activities, Iran has
tested small cascades (10, 20, then 164 machines) with uranium hexafluoride gas (UF6),
all under IAEA safeguards.8 On April 11, Iranian officials announced they had enriched
uranium to 3.5% U-235 in a cascade of 164 centrifuge machines.9 Construction on the
commercial-scale plant was also suspended in 2003, but Iran announced plans in April
2006 to install 3,000 centrifuges. Its construction partly underground raises concerns
about Iran’s intentions.
A recurring issues has been the detection of highly enriched uranium (HEU) particles
at sites in Iran. 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. Iran admitted to enriching uranium to just 1.2%, while the
particles sampled ranged from 36% to 70% U-235. In October 2003, Iranian officials
admitted they tested centrifuges at the Kalaye Electric Company using UF6 between 1998
and 2002. IAEA report GOV/2006/15 reveals that components also came from another
country besides Pakistan.
Another unresolved issue is how far Iran has pursued more sophisticated centrifuge
and laser enrichment technology. Iran admitted in October 2003 that it also pursued a
laser enrichment program beginning in the 1970s, and admitted that it possessed more
advanced centrifuge designs (P-2) in January 2004. Such advanced designs could double
Iran’s enrichment capabilities, shortening the time, potentially, to a bomb. Iran insists that
it received no centrifuge components after 1995, but admitted it received a limited number
of magnets for P-2 centrifuges in 2003 and in April 2006, admitted to purchasing magnets
suitable for the P-2 design. The IAEA continues to investigate this issue.
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
produce Polonium-210 for civilian purposes (for nuclear batteries) or in conjunction with
beryllium to create a neutron initiator for a nuclear weapon.
6 Iran, Report by the Director General, GOV/2005/67, Sept. 2, 2005.
7 “Iran ‘Hands Over Nuclear Cookbook,’” Nov. 18, 2005, Aljazeera.net
8 Iran, Report by the Director General, GOV/2006/15, Feb. 27, 2006.
9 “Nuclear Energy Facilitates Sustainable Development: Aqazadeh,” IRNA, Apr. 11, 2006.

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Finally, 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 suggested 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. However, Iran’s design
information for the facility, which omitted necessary hot cell equipment for producing
radioisotopes, conflicted with reported Iranian efforts to import hot cell equipment.
Construction of the IR-40 reactor has continued, despite the Board’s continued calls for
a halt, although Iranian officials predict that the reactor will not be operational until
2011.10 The heavy water production plant reportedly has been operational since 2004, and
in August 2006, Iranian officials announced they would double its production.
Significance for a Nuclear Weapons Program
Iran is likely years away from producing weapons-grade plutonium or highly
enriched uranium. The Director of National Intelligence John Negroponte told the Senate
Select Committee on Intelligence on February 2, 2006, that “We judge that Tehran
probably does not yet have a nuclear weapon and probably has not yet produced or
acquired the fissile material.” According to one report, the 2005 National Intelligence
Estimate on Iran assesses that it will be 10 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.
Calculations of nuclear weapons production are generally based on estimates of
fissile material production. One calculation is that a cascade of 1000 P-1 centrifuges could
produce one bomb’s worth of HEU (25 kg) in 2.2 to 2.7 years; and that a cascade of 3000
P-1 centrifuges could produce the same amount in 271-330 days.12 However, such an
estimate assumes that Iran has the necessary amount and quality of uranium hexafluoride
to feed the enrichment plant, the necessary components for building 1000 or 3000
centrifuges, and the necessary engineering skills to keep such cascades operating with few
mishaps and little downtime. In short, Iran’s limited experience in enrichment so far
should not be equated yet with an ability to operate an industrial-scale enrichment plant
for peaceful or weapons purposes.
Negotiating with Iran
Since 2003, negotiations with Iran on its nuclear program have proceeded on two
levels — with IAEA inspectors and at the IAEA Board of Governors in Vienna, and with
the European Union foreign ministers (known as the EU-3) of Germany, the UK, and
France. In 2006, the EU-3 were joined by Russia, China and the United States after Iran’s
noncompliance was reported to the U.N. Security Council.
10 GOV/2006/15.
11 “Iran is Judged 10 Years From Nuclear Bomb,” Washington Post, Aug. 2, 2005.
12 International Institute for Strategic Studies, Iran’s Strategic Weapons Programmes: A Net
Assessment, (UK: Routledge, 2005), p. 54.

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Some observers may view the second negotiating track as necessary because the
IAEA and Board of Governors failed to take decisive action against a clear pattern of
deception early on; others may view it as necessary because of the potential danger of Iran
pulling out of the NPT, should sanctions be imposed by the U.N. Security Council. Iran’s
voluntary measures negotiated with the EU-3 can be seen as allowing IAEA inspectors
greater access than would otherwise be granted under Iran’s comprehensive safeguards
agreement, but also as leaving Iran free to set the terms of engagement, since the
concessions were voluntary and political. While it is true that the EU-3 have been unable
to obtain Iran’s agreement to a permanent halt to uranium enrichment activities — their
key objective — such an objective could not have been pursued by the IAEA because that
is not in its mandate. To some observers, two years of negotiation and a temporary
shutdown have bought the world community two years of time to change Iran’s mind
about nuclear weapon aspirations.
Within a few months of Iran’s voluntary moratorium, there were signs of continued
activities that called into question Iran’s commitment. Although the November 2004 Paris
agreement clarified the terms of the moratorium, by March 2005, Iran proposed running
its pilot-scale enrichment facility, which EU-3 negotiators rejected. In April 2005, Iran
said that unless negotiations progressed, it would start up its uranium conversion plant,
which it did in August 2005.13 Following Iranian President Ahmadinejad’s inflammatory
remarks at the September 2005 U.N. Summit, the IAEA Board voted on resolution
GOV/2005/77, which found Iran in noncompliance with its safeguards agreement.
Specifically, the Board found that “Iran’s many failures and breaches of its obligations to
comply with its NPT Safeguards Agreement, as detailed in GOV/2003/75, constitute
noncompliance in the context of Article XII.C of the Agency’s Statute.”
For several months thereafter, Iran provided limited details on outstanding issues and
negotiated an offer to conduct uranium enrichment on Russian soil as an alternative to
indigenous production. In January 2006, Iran abandoned its voluntary suspension of
enrichment-related activities negotiations, as well as the interim application of the
Additional Protocol, prompting an emergency Board meeting. An IAEA report prepared
for the meeting linked, for the first time, a Khan network document in Iran’s possession
on uranium casting and machining to the fabrication of nuclear weapons components.14
Iran asserts that the Khan network provided the document on its own initiative.
Nonetheless, Article II of the NPT obligates Iran not to receive any assistance in the
manufacture of nuclear explosives, so the question of whose initiative prompted transfer
of the document is moot. The February Board passed a resolution (GOV/2006/14, without
consensus) to report Iran to the Security Council.
The U.N. Security Council issued a presidential statement on March 29, 2006 calling
upon Iran to reinstate its suspension of enrichment and reprocessing, reconsider
construction of its heavy water reactor, ratify and implement the Additional Protocol and
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 See [http://www.iaea.org/NewsCenter/Statements/DDGs/2006/heinonen31012006.pdf].

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implement transparency measures.15 Iran continued its enrichment activities, while
claiming it was cooperating with the IAEA.16 The IAEA reported to the U.N. Security
Council (GOV/2006/27) on April 28 that it was “unable to make progress in its efforts to
provide assurance about the absence of undeclared nuclear material and activities in Iran.”
Its June 8 report (GOV/2006/38) reported even less progress, given a lack of new
information.
On June 6, 2006, the EU-3 and the United States offered Iran a new negotiating
proposal, which reportedly included incentives such as affirmation of Iran’s inalienable
right to peaceful nuclear energy, assistance in building state-of-the-art light water reactors
for Iran, fuel supply guarantees, dismissing U.N. Security Council consideration of Iran’s
NPT noncompliance, WTO membership, and an end to certain U.S. sanctions to allow Iran
to purchase agriculture appliances and Boeing aircraft parts.17 In return, Iran would
suspend enrichment- and reprocessing-related activities, resume implementation of the
Additional Protocol and fully cooperate with the IAEA. Iran’s moratorium could be
reviewed once several conditions had been met, including resolving all issues and
restoring international confidence in the peaceful nature of Iran’s nuclear program. The
proposal also outlined several measures targeted at Iran’s nuclear program should Iran not
agree to cooperate: a ban on nuclear-related exports, freeze of assets, travel/visa bans,
suspension of technical cooperation with the IAEA, a ban on investment in related entities,
and on Iranians studying abroad in nuclear and missile-related areas. Broader measures
could include an arms embargo, no support for WTO membership, and a general freeze
on assets of Iranian financial institutions.
Iran’s
lackluster
response prompted the Security Council to adopt UNSCR 1696 on
July 31, giving Iran a deadline of August 31 to comply with Council demands. Yet, the
resolution appeared to have little effect on Iran. On August 31, 2006, the IAEA reported
that Iran had failed to suspend enrichment-related activities (GOV/2006/53), sparking
several months of discussion on sanctions. Reportedly, the United States favored a travel
ban and freezing assets of key Iranian leaders, while Russia and China appeared not to
favor sanctions. On December 23, 2006, Security Council members unanimously adopted
UNSCR 1737, which calls on Iran to suspend all enrichment-related and reprocessing
activities and all work on all heavy-water-related projects, to be verified by the IAEA.
UNSCR 1737 also requires states to prevent the supply, sale or transfer of equipment and
technology that could contribute to enrichment-, reprocessing-, heavy-water-related
activities, or missile delivery systems in Iran and to freeze the funds of persons and entities
involved in the nuclear and ballistic missile programs.18 At the end of 60 days (February
23, 2007), the IAEA will report again to the Security Council, which will review Iran’s
actions.
15 See [http://www.un.org/News/Press/docs/2006/sc8679.doc.htm] for full text.
16 “EU says Iran Nuclear Announcement ‘Regrettable,’” Reuters, Apr. 12, 2006.
17 ABC News released some details in an article by Luis Martinez on June 6, 2006, “Nuclear
‘Carrots and Sticks’ for Iran: Proposal Offers Rewards, Punishment to Convince Iran to Dump
Enrichment Program.”
18 See [http://www.un.org/News/Press/docs//2006/sc8928.doc.htm].

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