IAEA Staff Report
8 March 2006

Iran needs to continue to be transparent working with the Agency. I think there is complete agreement that Iran needs to go the extra mile and work with us. Nobody will be happier than I when we are able to conclude that all the outstanding issues in Iran’s nuclear programme are clarified... Everyone is looking for a political settlement.

What we need at this stage is cool headed approaches. We need people to lower the rhetoric. We need to continue to see how we can move forward.

This is a new phase of diplomacy. The Security Council will lend its weight to the IAEA’s efforts so as to make sure Iran will work as closely as possible with us. So as to make sure that Iran takes the required confidence building measures.

The IAEA will continue to do inspections in Iran and continue to ask Iran to be as transparent as possible. We will continue to do the verification, while the Security Council deliberates on the global picture.

We need a settlement that assures Iran its peaceful right to nuclear energy. But at the same time assures the international community that Iran’s programme is exclusively for peaceful purposes.

I am still optimistic. I think sooner or later the parties will decide there are no other options but negotiations.

The UK ambassador, Peter Jenkins, spoke on behalf of EU3 (UK, France, Germany), largely repeating the 27 Feb statement of the EU Foreign Ministers.

Austria spoke in the same sens on behalf of European Union.

The Non Aligned Movement expressed its concerns through the Ambassador of Malaysia, asking for avoiding to refer the Iran file to the Security Council.

Remarks by
Ambassador Gregory L. Schulte, U.S. Permanent Representative to the
United Nations Office in Vienna
and the International Atomic Energy Agency

In September 2005,

the International Atomic Energy Agency made two important findings:

• first, that Iran has violated its international obligations;

• second, that Iran has lost international trust in the peaceful nature of its nuclear program.

We called on Iran’ s leaders to regain our trust.

Instead they broke IAEA seals to restart enrichment.

In February, we reported our findings to the UN Security Council.

We also reported a list of steps required of Iran to begin an extensive period of confidence-building.

These steps included:

• suspending uranium enrichment, including research and development, for which Iran today has no civil requirement;

• reconsidering construction of a new research reactor, which Iran does not need for peaceful use, but can produce weapons-grade plutonium;

• ratifying promptly and implementing in full the Additional Protocol, to help the Agency resolve outstanding questions;

• implementing transparency measures requested by Dr. ElBaradei, including access to individuals, documents, dual-use equipment, and military facilities.

Iran’s leaders had a month to meet these requirements.

The Director General’s report makes clear that they failed to meet a single one. Indeed, rather than acting to regain international confidence, Iran is moving ahead brazenly with its enrichment program, continuing its determined, step-by-step effort to acquire the material, technology, and know-how to produce nuclear weapons.

The Director General’ s report will now be transmitted to New York for action by the Security Council.

The leadership in Tehran has thus far chosen a course of flagrant threats and phony negotiation.

They hoped that this course would keep the international community divided and their nuclear ambitions unchecked.

Instead, the course they have chosen has left them increasingly isolated and increasingly at risk of meaningful consequences.

The leadership in Iran needs to chose a different course.

And choosing the path of cooperation, rather than confrontation, would best serve the people of Iran.

The people of Iran deserve nuclear energy and international respect, not a future of increasing isolation and consequence for the failure of their leaders to meet international commitments and heed international concern.

Ambassador of Iran Ali Salehi dealt with technical questions, aiming to prove that Iran did fulfill all its obligations under NPT, and did reassert its right to keep activities of nuclear Research and Development.

ABDUL MINTY - South African Governor on the IAEA Board - ROUGHT TRANSCRIPT

South Africa is concerned at the critical developments. There seems to
be no compromise agreement at this stage. We have always urged this to
be solved within the Agency. Hope all will participate in continued
dialogue that requires political will of all concerned, without
resulting in threats or coercive action. We must stop confrontatoin;
this situation can easily spiral into conflict. We have always
emphasized the IAEA as the competent authority. The Director General’s
report has shown the important work done by the Agency, and hope that
the Agency will be permitted to complete its work, without being pressed
to complete it to artificial deadlines. Whatever happens in the Security
Council, we all know that we need dialogue and negotiatoin in the end.
Whatever happens in the Security Council, we expect to see the Iran item
on the June IAEA Board Meeting in June.

Chairman’s Conclusion on Sub-item 5(b)
Report by the Director General on the implementation of the NPT.

Safeguards Agreement in the Islamic Republic of Iran

I have no more speakers on my list. All comments made will be duly reflected in the summary records of the meeting. Therefore, I will not sum up the discussion in detail.

The Board took note of the Director General’s report on the implementation of the NPT safeguards agreement in the Islamic Republic of fran contained in document G0V12006/ 15. The Board expressed its appreciation to the Director General and the Secretariat for their professional and diligent work on this issue.

It was noted that, in accordance with the Board’s resolution G0V12006/14, the Director General’s report would be conveyed to the UN Security Council.

Some members expressed their regret at the lack of implementation of the confidence building measures requested of fran by the Board in its resolution of 4 February 2006, and requested the full implementation of those measures, and further regretted fran’s declaration of 6 February 2006 that it intended to suspend the voluntary implementation of non-legally binding measures, including the Additional Protocol.

Some members regretted the slow pace of progress since February towards clarifying outstanding questions relating to fran’s nuclear programme. They also expressed concern at information related to a possible military dimension to fran’s programme. They regretted that the Agency was still not in a position to conclude that there were no undeclared nuclear materials or activities in fran. They called on Iran to provide full transparency, including the provision of additional information and documentation related to P-i and P-2 centrifuge programmes and the procurement of dual-use equipment; access to, and cooperation by, relevant individuals; and access to certain military-owned workshops and R&D locations that the Agency may need to visit in the future as part of its investigation.

Some Members recognized that Iran had taken corrective measures, and had been continuing to provide some transparency measures. They encouraged fran to continue its cooperation with the Agency to resolve the remaining issues regarding the scope and nature of Iran’s nuclear programme. They re-emphasized the distinction between voluntary confidence building measures and legally binding safeguards obligations.

They noted the conclusion in the Director General’s report that all declared nuclear material in fran has been accounted for, and that the Agency had not seen any diversion of nuclear material to nuclear weapons or other nuclear explosive devices. They recognized that the Agency’s work on verifying the correctness and completeness of fran’s declarations is ongoing. They also noted that the process of drawing a conclusion with regard to the absence of undeclared nuclear materials or activities is a time consuming process, even with an Additional Protocol in force.

It was emphasized that the Agency was the sole competent authority for verification and that it should continue its work to resolve the Iranian nuclear issue.
Board of Governors
8 March 2006 Page 2

The continued need for diplomatic negotiations and dialogue among all parties, covering all relevant issues was emphasized as the way to reach a peaceful solution of the Iranian nuclear issue. In this regard, appreciation was expressed for all initiatives, such as the EU/Iran dialogue and the Russian proposal on a joint venture, aimed at paving the way to a speedy conclusion of the Iranian nuclear issue. Calls were made for Iran to adopt a responsive attitude towards implementing the confidence building measures previously called for by the Board. The basic and inalienable right of all Member States to develop nuclear energy for peaceful purposes in conformity with their respective legal obligations was reiterated.

Some members emphasized the importance of addressing the Iranian nuclear issue within the context of the establishment of a nuclear-weapon-free zone in the region of the Middle East.

The Board requested the Director General to continue keeping it informed of developments as appropriate.

Is this summing-up acceptable?

It is so decided.

There has been a request to make the report of the Director General, contained in document GOV/2006/l 5, public. Is this agreeable to the Board?

It is so decided.

Remarks by IAEA Director General ElBaradei at conclusion of March IAEA Board - ROUGH TRANSCRIPT

The Board has completed its consideration of the Iran issue. I can say that there are common threats. First that Iran needs to be continuing to work with the agency, and to go the extra mile. No one would be more happy than me to conclude all the outstanding issues. Second that Iran needs to continue to work on confidence building measures. This resolution of outstanding issues...The international community for a while has asked Iran to take confidence building measures. Third, everyone is looking for a political settlement. Everyone understands that a comprehensive political settlement taking into account all underlying issues is needed.

We need cool headed approaches. We need people to lower the rhetoric, to see how we can move forward.

This will take some time, this will not be resolved tomorrow, it is complex and we need to put our heads together. Everyone benefits from this.

I will convey my report, as requested, to the Security Council today or tomorrow. Whether or when the Security Council takes up this issue is obviously for the Security Council to decide. What action they take is obviously for the Security Council to deliberate on.

I should again say, everyone who spoke on the Security Council emphashised this as another phase in diplomacy, and as an extension of the solution. The Security Council’s prime responsibility is the peaceful settlement of disputes. To lend its weight so that Iran works with us, takes confidence building measures, and to use theSecurity council as a forum to find ways and means.

As I said earlier, there are few options and one solution: A comprehensive political security and economic agreement, that underlies the nuclear programme of Iran. No one questions the right of Iran to nuclear energy, but the international community needs to be assured it is for exclusively peaceful purposes.

We will continue to work on our mandate. We have teams slotted to go soon to Iran. I continue to ask Iran to be transparency. It is in Iran’s interests to clarify outstnading isues. It will impact positively on cooperation. It will impact positively on confidence building measures.

As with North Korea in the past, maybe for the next few months or weeks, there will be a division of labour, we will coninue to do verification, and the Security Council will delberate on the global political picture, to get Iran to cooperate and to go back to the negotiating table. The solution should engage all parties.

Once we start to discuss and see the issues, the US should be engaged in dialogue. That is far down the road. I look for the Security Council to provide support to move down the diplomatic road.

Q & A

I am not disapppointed. Things could have twisted and turned, but I continue to hope to achieve an agremenet, to go back ot the negotiating table, it could happen next week, we have time. Hopefully the security Council can lend a hand.

My role is to make sure Iran cooperates, and to strike a balance between Iran’s right to nuclear energy and the concerns. There are so many ways to skin a cat. Hope all will go out of his or her way for a political settlement; it is the only way forward.

It is normal that we will keep the Security Council informed. What exactly is the nature of the weport. The resoluiton said I shuld convey the discussion and the report to the Security Council. Lets not get into hte legalities.

I am still optimistic. when I said within weeks, the point is sooner or later hte parties will decide there is no other option but negotiations. Iran will take the necessary confidence building measures. How and under which modalities which parties are questions that I guess will be discussed in the Security Council.

I hope we will not have escalation. I hope we will not have escalation. I am worried and Kofi Annan also mentioned this morning the need to be cooler headed, to lower the pitch of rhetoric. A war of words will not help. Its now time to get back ot the negotating table.

It is a misunderstanding to see a discussion in the Security Council as a failure of the IAEA. The Security Council is a part of the non-proliferation regime. It is part of the safeguards agreements and statute. We need to engage in political dialogue. We need to help Iran to get themselves out of the hole they have dug themselves into.

After US Ambassador Shulte gave his Press Statement, Vaeidi (deputy head of Iran’s Supreme National Security Council (SNSC) for International
Affairs) read out the following statement:

“This session adopted no resolution. It means that there is no consensus on any action against Iran.

Based on the previous resolution, the DG’s report will be sent to New York.

In our view the process is still going on. There are two options before us. Either to compromise and cooperate or go for confrontation. We hope and spare no effort that the first option be realized. In any case we will continue to exercise our R&D activities based on our right.

The United States may have the power to cause harm and pain but it is also susceptible to harm and pain. So, if the United States wishes to choose that path, let the ball roll.

We offered the candidate opportunity for a settlement. We will see how events fold on.

For now, we will have to review the situation, adopt our policy and adjust our approach to conform to the new situation.

Ambassador of Iran Ali Salehi answered questions - ROUGH TRANSCRIPT

QUESTION What do you mean by harm and pain?

ANSWER: We are not going to act, our reaction would depend on the
action. Then we will decide after careful study.

QUESION: Does referral to the Security Council trigger Iran to act?

ANSWER: This issue has already been reflected. As long as there is no
decision. We will study the matter in Tehran and will decide

QUESTION: Are you still pursuing dialogue and international talks?

ANSWER: In principle we are for dialogue, negotiatoin and peaceful
settlemnetof the issue. We are determined to cooperate with the IAEA,
and will continue our safeguards agreement.

QUESTION: How can the world be guaranteed that Iran is not seeking a
nuclear weapon

ANSWER: Read the documents we put on the website of the IAEA -
comprehensive information. Yo ucan use that to prove our nuclear
programme is purley for peaceful purposes. See INF/657 and another put
on the website today.

QUESTION: Many people fear military conflict, that this is Iraq II.

ANSWER: The important thing is we have no intention of confrontation.
Two parties are needed for any conflict. We are determined to settle
this peacefully and welcome any gesture. we are warning and advising the
other side to not escalate this situation

QUESTION: Wll research continue?

ANSWER: Reasearch is an inalienable right, our scientists cannot be
deprived. Our decision on R&D is irreversible.

QUESTION: You call the US a warmonger - why?

ANSWER: I am very surprised this question comes from Fox (general
laughter). Thousands our citizens have been killed because of military
invasion. Iran is a victim of terrorism, supported by the US, in one
instance hundreds of Iranians were turned to ashes. Iran is the only
victim of chemical weapons. We combat terrorism and support all
instruments to combat terrorism.

QUESTION: How do you feel about special inspections called for today by
the US

ANSWER: INF 6/153 (Iran’s safeguards agreement) provies that when it is
called for, we are obliged and we are bound to the rules and procedures.

QUESTION: Is Iran going to ratify the Additional Protocol

ANSWER: Were in the process of doing so, now everything is in jeopardy.