Nuclear Nonproliferation: Strengthened Oversight Needed to Address Proliferation and Management Challenges in IAEA's Technical Cooperation Program
Released: 2009-03-31T00:00:00

Letter

Background

Overall policy direction for the TC program is set by IAEA’s policy-making bodies—the General Conference and the Board of Governors. The United States is a permanent member of the Board of Governors, which typically meets 5 times per year. IAEA’s Secretariat—led by a Director General and structured into six functional departments—is responsible for implementing policies established by the Board of Governors and the General Conference. The Department of Technical Cooperation, which is headed by a Deputy Director General, is structured primarily around four regional divisions: Africa, Asia and the Pacific, Europe, and Latin America and the Caribbean. The department also includes a Division of Programme Support and Coordination, which is responsible for developing TC program strategies, communications, and partnerships, and managing relevant information systems and TC financial resources. In addition, an external auditor and IAEA’s Office of Internal Oversight Services conduct annual audits and reviews of the TC program.

Several individuals are involved in the TC project team responsible for developing and overseeing the project. The team includes (1) a project officer within the TC Department; (2) a technical officer from each relevant IAEA department (such as the Department of Nuclear Sciences and Applications); and (3) a national liaison officer at the country level who represents the member state, serves as coordinator for TC projects in the host country, and acts as liaison with host country governments and institutes.

Typically, the TC program develops and approves new projects on a 2-year cycle. The most recent set of new proposals were approved in fall 2008. Member states begin submitting project proposal concepts to IAEA in September of the year prior to approval. IAEA officials screen concepts through the fall, and member states develop and refine their proposals through March of the approval year. By July, IAEA’s Secretariat comes to a final agreement on TC project proposals that it will back for approval by the Technical Assistance and Cooperation Committee and the Board of Governors. The TC project proposals are discussed with member states in bilateral and regional group meetings during IAEA’s General Conference, which is held in September; in November, the Technical Assistance and Cooperation Committee and the Board of Governors give final approval to the proposed TC projects.

The United States and IAEA Do Not Systematically Limit or Prevent TC Assistance to Countries Posing Potential Terrorism and Proliferation Concerns

Neither the United States nor IAEA seeks to systematically limit or deny TC assistance to countries designated as state sponsors of terrorism, even though under U.S. law these countries are subject to sanctions. In addition, TC assistance has been provided to countries that are not party to the NPT, and neither the United States nor IAEA has sought to exclude these nations from TC assistance. Finally, while the United States has encouraged IAEA to condition TC assistance to countries according to their safeguards status, IAEA does not take this factor into account when allocating program funds. Appendix II provides more detailed information on the states and territories that received TC assistance in 2007.

Four Countries Designated by the United States as State Sponsors of Terrorism Receive TC Assistance

Countries deemed by State as state sponsors of terrorism—meaning the Secretary of State has determined that the countries’ governments have repeatedly provided support for acts of international terrorism—have been provided nuclear equipment and other assistance through the TC program. The United States has designated four countries—Cuba, Iran, Sudan, and Syria—as state sponsors of terrorism, pursuant to several U.S. laws. According to our review of IAEA data and financial records, 111 TC projects were approved for these four countries from 1997 through 2007, and they received approximately $55.7 million in TC assistance over that period. These projects ranged across a number of areas, from applying nuclear technologies to treat diseases and improve crop productivity to assisting nuclear power development. Table 1 shows the dollar amount of TC assistance each U.S.-designated state sponsor of terrorism received from 1997 through 2007.

According to State, the United States has applied several types of sanctions to these four countries, including restrictions on U.S. foreign assistance, a ban on defense exports and sales, certain controls over exports of dual-use items, and miscellaneous financial and other restrictions. These sanctions notwithstanding, direct U.S. nuclear trade with these countries involving the types of technologies provided by the TC program might not be permitted under U.S. adherence to other international nonproliferation controls. For instance, in a 2007 report to Congress, State concluded that three TC projects involving technology transfer for the operation and maintenance of the Iranian nuclear power plant at Bushehr could be subject to multilateral export controls if Iran were to procure such technology directly from suppliers. The State report noted, “nder the Nonproliferation Principle of the NSG [Nuclear Suppliers Group] Guidelines the United States and other responsible members of the NSG would deny such direct transfers.”

The United States has not sought to systematically exclude or limit the four U.S.-designated state sponsors of terrorism from TC assistance. State officials told us that the department would not recommend withholding U.S. funding to the TC program because of the support that IAEA provides to these four countries. They said that it is a long-standing department policy to pay the full share of U.S. support to the TC program because doing so helps maintain international political support for and participation in IAEA, including international support for safeguards. In addition, because TCF resources are fungible, State officials asserted that withholding U.S. contributions to the TCF to punish state sponsors of terrorism would have no practical impact on the TC funding these nations receive. A U.S. Mission official told us that once the United States provides its contribution to the TCF, it cedes control over how the funds are disbursed by IAEA.

Several laws govern U.S. support to the TC program. One restriction under these laws prohibits U.S. funds contributed to IAEA from being used for projects in Cuba, except in certain circumstances. Accordingly, State withholds a portion of its voluntary contribution to the TCF equal to the U.S. proportionate share of the TC program’s expenditures in Cuba. In the past, the United States also withheld a proportionate share of its TCF contribution for Iran, Libya, and Territories Under the Jurisdiction of the Palestinian Authority. State also must report annually to Congress on all IAEA programs or projects in certain countries, including Burma (Myanmar), Cuba, Iran, North Korea, and Syria.

IAEA officials told us that the TC program does not attempt to exclude countries on the basis of their status as U.S.-designated state sponsors of terrorism or other political considerations. Under the TC program’s guiding principles, for example, the provision of TC assistance is not subject to any political, economic, military, or other conditions that are inconsistent with IAEA’s statute. Moreover, according to the Deputy Director General for the TC program, requests for TC assistance are evaluated strictly on technical merits and the contributions of proposed projects to a nation’s development priorities, subject to the conditions of the IAEA statute, IAEA guiding principles and operating rules pertaining to technical assistance, and any relevant decisions by the Board of Governors and the UN Security Council. This official added that the program seeks to include as many countries as possible and that “there are no good countries and there are no bad countries” participating in the program. In her view, denying or limiting participation of member states in the TC program was a matter for the Board of Governors to consider.

Other IAEA officials told us that under the agency’s statute, IAEA’s Secretariat is powerless to limit or condition TC assistance to specific countries, even in cases where countries have been deemed by the Board of Governors to be violating their IAEA obligations or in cases where recipient countries were suspected of being engaged in undeclared, clandestine nuclear activities. For instance, the Board of Governors determined in September 2005 that Iran had breached its safeguards obligations and was not complying with IAEA’s statute. However, TC projects in Iran were not restricted until February 2007 following a UN Security Council resolution on Iran’s nuclear activities. In addition, in 2008, IAEA’s Director General stated it would be inappropriate to block approval of a TC project in Syria for a nuclear power plant feasibility study before IAEA verified claims concerning Syria’s alleged construction of an undeclared nuclear reactor. According to State officials, several countries, including the United States, asserted that the approval of this project would be “wholly inappropriate” when Syria had not provided all of the cooperation required by IAEA to investigate these allegations. IAEA’s Board of Governors ultimately approved the project in November 2008. The United States did not attempt to block approval of the project after receiving assurances that IAEA would monitor the project closely, report as appropriate, and ensure that any equipment provided under the project would be used only for the intended purposes.

Finally, in addition to providing assistance to the four countries the United States has designated as state sponsors of terrorism, the TC program has also provided nuclear technology and expertise to other countries that the United States has sanctioned or taken other punitive actions against. Examples of such countries and the total amounts of TC assistance provided to them from 1997 through 2007 include the following: Approximately $7.3 million for Burma, which is subject to targeted U.S. trade, financial, and other sanctions. The Secretaries of State and of Energy have declared jointly that the development of nuclear infrastructure of any kind in Burma would be inappropriate. TC projects have been approved for Burma to improve nuclear instrument repair and maintenance services, enhance pest control, and apply nondestructive testing techniques in construction projects.

Approximately $9.7 million for Belarus, which the United States has characterized as “a regime of repression in the heart of Europe” and against which the United States has imposed targeted financial sanctions and travel restrictions. TC support has been provided to assist Belarus in minimizing threats posed by radioactive waste at former military sites, establishing a center of competence on radiation oncology, and remediating areas affected by the Chernobyl accident.

Approximately $6.1 million for Venezuela, which, among other things, State has determined to be engaging in diplomacy designed to deliberately undermine U.S. interests, including deepening relations with Iran and publicly supporting Iran’s nuclear program. IAEA has approved TC assistance for Venezuela to help it strengthen its technical capabilities in radiotherapy, nuclear medicine, and radiopharmaceutical services, and to more effectively apply nuclear techniques in managing water resources.

Based on our review of recent project summaries, the TC assistance provided to these countries does not appear to involve support that could have direct weapons applications. However, as we discuss in the following section, given the dual-use nature of some nuclear technology and the absence of more complete information from IAEA, it is difficult for the United States to make firm judgments about the proliferation risks of TC proposals and projects.

Non-NPT Countries Are Receiving TC Assistance

U.S. and IAEA officials have described the NPT as the cornerstone of the international nuclear nonproliferation regime and a key legal barrier to nuclear weapons proliferation. However, states that are not party to the NPT—India, Israel, and Pakistan—received approximately $24.6 million in TC assistance from 1997 through 2007. India has not received TC assistance through national-level TC projects but has received TC support as a participant in regional TC projects. Israel and Pakistan have received support for 63 national-level projects, as well as for regional TC projects. For example, national TC projects in Israel and Pakistan have included assistance to control fruit flies and suppress other pests, enhance nuclear medicine practices and establish radiation physics courses, and improve nuclear safety. Table 2 shows the total amount of TC assistance provided to each of these countries from 1997 through 2007.

The TC program does not differentiate between states based on their NPT status. IAEA officials told us that creation of IAEA predates the entry into force of the NPT, and treaty membership is not obligatory for IAEA membership and receipt of TC assistance under the agency’s statute. India, Israel, and Pakistan joined IAEA before the NPT entered into force.

State officials told us that the United States does not seek to systematically limit TC program support to countries that are not signatories to the NPT. State officials also told us that, in accordance with statutory requirements, State must annually determine and report to Congress that Israel’s right to participate in IAEA activities is not being denied. However in its annual funding pledge to IAEA, State asks that IAEA give preference to states that are party to the NPT in allocating the U.S. contribution to the TC program.

IAEA Does Not Condition TC Assistance on the Basis of the Recipient Country’s Safeguards Status

While U.S. and IAEA officials have stressed the need for all countries to bring into force comprehensive safeguards agreements and additional protocols with IAEA as soon as possible, neither the United States nor IAEA has sought to limit TC funding to countries that have not implemented such agreements. Together, these safeguards measures allow IAEA to provide assurances that all declared nuclear material is being used for peaceful purposes and that a country has declared all of its nuclear material and activities.

Nearly all states receiving TC assistance are nonnuclear weapon state parties to the NPT. Under Article IV of the NPT, all states party to the treaty have the right to participate in the exchange of equipment, materials, and scientific and technological information for the peaceful uses of nuclear energy. According to IAEA, Article III of the NPT also makes it mandatory for all nonnuclear-weapon states to conclude comprehensive safeguards agreements with the agency. These agreements are to be concluded by such states within 18 months of their accession to the treaty. The United States and IAEA have recognized an inherent linkage between nonnuclear weapon states’ rights to access peaceful nuclear technology and their obligation to accept safeguards on their nuclear activities, although State officials told us that to limit TC funding to states that have not completed comprehensive safeguards agreements with IAEA could be seen as inconsistent with IAEA’s statute.

IAEA has not conditioned TC assistance provided to recipient states on the basis of their safeguards status. According to our analysis of IAEA records, 17 countries and territories that did not have comprehensive safeguards agreements in force with the agency at the end of 2007 received approximately $6.7 million, or about 7 percent, of the $93.3 million in TC assistance disbursed in 2007. This list includes three states and one nonstate territory that are not party to the NPT—India, Israel, Pakistan, and the Territories Under the Jurisdiction of the Palestinian Authority. The remaining 13 states have all been party to the NPT longer than 18 months—in most cases for more than 10 years—meaning they have not fulfilled their NPT Article III obligation. Table 3 shows the states and territories that did not have comprehensive safeguards agreements in effect in 2007 and the amounts of TC assistance they received that year.

In addition, we found that 62 states and territories without an additional protocol agreement in effect with IAEA received approximately $43.2 million, or approximately 46 percent, of TC assistance in 2007. Without additional protocols in force, IAEA has limited ability to detect clandestine nuclear programs, and its inspection efforts remain focused on verifying declared nuclear material, activities, and facilities. Both State and IAEA officials have asserted that the additional protocol should become the new universal safeguards standard. Table 4 lists the states and territories without additional protocols in effect as of the end of 2007 and the amounts of TC assistance they received that year.

In its annual pledge of funding to the TC program, State asks that IAEA consider whether a recipient country has in force a comprehensive safeguards agreement and an additional protocol when it allocates TC funds. However, according to IAEA officials, IAEA’s Secretariat is not in a position to take such considerations into account in the absence of a decision by its policy-making bodies. The Deputy Director General for the TC program, for example, told us that such guidelines would need to be developed by the Secretariat after consultation with and approval by the member states. IAEA officials stated that while IAEA’s statute, TC program guidance, and TC program agreements with individual member states include project- and technology-specific safeguards conditions and peaceful use obligations, these documents do not require that member states have comprehensive safeguards agreements or additional protocols in force to receive assistance.

The United States Faces Difficulties in Identifying, Assessing, and Resolving TC Program Proliferation Concerns

The proliferation concerns associated with the TC program are difficult for the United States to fully identify, assess, and resolve for several reasons. First, while State has implemented an interagency process to review proposed TC projects for proliferation risks, consistent with the recommendation in our 1997 report, the effectiveness of these reviews is limited because IAEA does not provide the United States with sufficient or timely information on TC proposals. Second, for TC proposals that DOE and the national laboratories have identified as having possible proliferation risks, State was unable to provide us with documentation explaining how those proliferation concerns were addressed. Finally, State lacks a formal policy that identifies countries from which the United States will not accept TC fellows, and IAEA does not systematically monitor former TC fellows to determine whether they still reside in their home country and are still involved in peaceful nuclear research related to their fellowship studies.

The United States Does Not Comprehensively Evaluate TC Proposals for Proliferation Concerns because IAEA Does Not Provide Sufficient and Timely Information

DOE and the national laboratories began reviewing TC proposals for possible proliferation concerns and providing their findings to State as the result of a recommendation in our 1997 report on the TC program. However, this review process is deficient because DOE and the national laboratories receive limited information to conduct their proliferation assessments and have little time to complete them. According to State, DOE, and national laboratory officials, the United States has had difficulty in obtaining detailed information on proposed TC projects during the proposal development phase. The initial proposal development process is internal to IAEA’s Secretariat and information is kept confidential between the recipient country and the agency and is not releasable to third parties, including the United States. According to State, DOE, and national laboratory officials, IAEA member state representatives, including U.S. Mission staff, do not have a formal mechanism to obtain information on project proposals while they are under development.

DOE and national laboratory officials told us that they attempt to make the best possible determination of TC proposal proliferation risks on the basis of all available information. However, in the vast majority of cases, the information they receive on TC proposals is very limited, according to our analysis of DOE and national laboratory data. Specifically, we found that national laboratory officials received only the title of proposed projects for 97 percent—or for 1,519 of 1,565—of proposed TC projects they reviewed from 1998 through 2006. For the remaining 3 percent, or 46 of the proposed projects, DOE and the national laboratories were able to obtain some additional information on the proposed projects. See appendix III for more specific information on the number of TC proposals reviewed by DOE and the national laboratories from 1998 through 2006.

DOE and national laboratory officials told us that a TC project proposal title can occasionally raise proliferation concerns but that the title alone is generally insufficient to reliably assess proliferation risk. Moreover, proposal titles can be misleading and obscure more serious proliferation implications. For instance, the 2006 TC proposal from Iran requesting assistance for the completion of the Arak heavy water research reactor—a type of reactor that could be a source of plutonium for nuclear weapons— was entitled “Strengthening Safety Capabilities for the Construction of a Research Reactor.” Iran asserted that the reactor was intended for the production of medical isotopes, and the proposal was approved for funding by IAEA’s Secretariat. However, as a result of objections by the United States and other nations, the Board of Governors ultimately did not approve this proposal.

In addition to the limited information on TC proposals available to the national laboratories, the dual-use nature of some nuclear technology also complicates efforts to assess TC proposals for proliferation risks. IAEA applies safeguards to nuclear material, equipment, and facilities provided through the TC program in four “sensitive technological areas”—uranium enrichment, spent fuel reprocessing, heavy water production, and handling of plutonium and mixed uranium-plutonium fuel. These four areas relate to the production and handling of fissile material. However, according to DOE and national laboratory officials, these four sensitive areas do not address all technologies related to the production of fissile material. For example, “nonsensitive” technology associated with the design and operation of civilian, light water power reactors might prove useful to countries seeking to design and build a plutonium production reactor. TC projects providing such technology might therefore raise proliferation concerns. Other “nonsensitive” skills and expertise that states acquire through TC assistance might provide basic knowledge useful to weapons, such as radioactive materials handling, familiarity with chemical processes and properties of nuclear materials, and use of various instruments and control systems.

Even in cases where more information on TC proposals was obtained, national laboratory officials told us that they still often lacked crucial details—such as equipment specifications—to reliably assess the proliferation risks. As an example, national laboratory officials told us that some TC proposals could include requests for procurement of “hot cells” to produce isotopes—a technology with dual-use implications. However, without specific technical details of the hot cell, it would not be possible to determine the potential proliferation risks associated with such a device.

In addition, DOE and national laboratory officials told us that in recent years, they have received less information about proposed TC projects. Moreover, DOE and national laboratory officials told us that such information is arriving closer to the time when such projects must be approved by the Technical Assistance and Cooperation Committee and the Board of Governors. The lack of full and timely information on TC project proposals complicates efforts by the United States and other IAEA member states to make informed decisions about TC proposals, including whether they raise proliferation concerns. State, DOE, and national laboratory officials told us that it is preferable to raise potential proliferation concerns about TC proposals with IAEA officials early in the development cycle, when such project proposals can be modified more readily.

In 2004, IAEA’s Safeguards Department began reviewing TC projects for possible proliferation risks. This review process includes evaluating proliferation risks of TC project proposals and reviewing all procurement requests made to the agency under ongoing TC projects. However, IAEA officials told us that the results of the Safeguards Department reviews are confidential and are not shared with the United States or other governments. IAEA officials declined to provide us with certain basic information regarding the results of these reviews, including the total number of TC proposals that the Safeguards Department identified as having possible proliferation concerns.

State Could Not Substantiate How It Addressed TC Proposals Identified by DOE as Having Possible Proliferation Risks

Under the interagency process for reviewing TC proposals for proliferation concerns, DOE and the national laboratories provide State with their assessments of the proposals. State, however, was unable to provide us with documentation describing the actions it took on the basis of DOE’s and the national laboratories’ findings or how, if at all, it raised their concerns with IAEA. According to DOE and the national laboratories’ assessment of TC proposals from 1998 through 2006, 43 of the 1,565 TC proposals reviewed had some degree of potential proliferation concern or required additional information to more clearly establish potential proliferation risk. The 43 project proposals for which the national laboratories raised potential concerns included, for example, projects to assist countries in various aspects of developing nuclear power reactors and research reactors, handling nuclear fuel, and using nuclear techniques in materials testing and other industrial practices.

We found that IAEA approved at least 34 of these 43 proposals. Of the remaining 9 proposals, 4 were not approved internally by IAEA’s Secretariat or—in the case of Iran’s 2006 Arak heavy water reactor proposal—by the Board of Governors, and 5 proposals in 1998 were reviewed by ORNL in a classified assessment. We did not determine whether those 5 proposals were approved by IAEA.

We requested information from State’s Office of Multilateral Nuclear and Security Affairs describing how it responded to DOE’s and the national laboratories’ findings of potential proliferation concerns among the TC proposals they reviewed. However, with the exception of documentation pertaining to U.S. objections on the Iranian heavy water reactor proposal in 2006, State was unable to provide us with any records documenting policy discussions or actions it took to address concerns in other TC proposals highlighted by DOE and the national laboratories. As a result, it is unclear what actions, if any, State took to address potential proliferation concerns of specific TC proposals identified by DOE and the national laboratories. State officials told us that records substantiating discussions within State on the DOE and national laboratory findings existed but could not be retrieved from State’s data and document management systems.

State officials told us that a 2005 reorganization of the department’s arms control and nonproliferation bureaus resulted in the loss of staff in the office overseeing IAEA issues, limiting its ability to effectively monitor TC program developments. Specifically, they said that prior to the 2005 reorganization, there were 14 full-time equivalent personnel working on IAEA- and NPT-related issues, but that this number was reduced to 5 full- time equivalent personnel due to the reassignment and retirement of personnel following the reorganization.

U.S. Policies and IAEA Procedures for TC Program Fellowships Have Several Shortcomings

State has not developed a formal policy that identifies countries that would not be eligible to send TC fellows to the United States to study nuclear issues. In addition, IAEA does not have a systematic process in place to track and monitor former TC fellows to determine, for instance, whether they still reside in their home country and are still involved in peaceful nuclear research related to their fellowship studies.

The United States accepts TC fellows and TC project participants from foreign countries. The acceptance process involves several steps. First, foreign nationals interested in a TC fellowship apply to IAEA’s TC Department, which reviews the applications and decides which candidates to accept or reject. IAEA identifies fellows who would be appropriate to place in the United States for studies. For approved applications, IAEA then sends a formal request to the U.S. Mission asking that the applicants be permitted to study in the United States at a specific institute.

The U.S. Mission forwards the applications to State’s Office of Multilateral Nuclear and Security Affairs within the International Security and Nonproliferation Bureau and to the Argonne National Laboratory. The State office reviews and approves or rejects the applications, and shares them with other members of the U.S. interagency committee on IAEA TC issues. In addition, State officials told us that foreign nationals requesting TC fellowships at DOE facilities would be reviewed against requirements in DOE orders. The Argonne National Laboratory, under a contract with State, facilitates placement of fellows approved by State at the institutes proposed by IAEA or at alternative facilities. The applicants are notified by IAEA of their fellowship’s acceptance by State and placement at institutes in the United States.

Once the foreign candidates confirm their acceptance, IAEA instructs them to apply for a U.S. nonimmigrant visa. State’s Bureau of Consular Affairs handles the adjudication of these visa applications, and in some cases, the consular officers will request a security advisory opinion, known as a Visas Mantis, if there are concerns that a visa applicant may engage in the illegal transfer of sensitive technology. According to State, the key role of the Visas Mantis process is to protect U.S. national security, particularly in combating the proliferation of weapons of mass destruction, their delivery systems, and conventional weapons.

Data provided to us by State indicated that 1,022 TC program fellows have studied nuclear issues at universities and other organizations in the United States from 1997 through 2007. In our review of this data, we found that 23 of the 1,022 fellows were from countries that were not NPT member states, such as Israel and Pakistan, or were from U.S.-designated state sponsors of terrorism, such as Syria. The fields of study pursued by these fellows included entomology, soil and plant science, analytical nuclear physics, and nuclear medicine.

We questioned State and Argonne National Laboratory officials to clarify the guidance and criteria State’s Office of Multilateral Nuclear and Security Affairs uses to approve TC fellowship applicants for the study of nuclear issues in the United States. State officials told us that there is no formal policy or set of criteria they use to accept or reject TC fellowship requests on the basis of an applicant’s country of origin. However, in response to our inquiry, State prepared a written description of the informal guidelines and preferences it uses to evaluate fellowship requests. According to this description, individuals from countries that have not signed the NPT are not eligible to pursue TC fellowships in the United States, although fellows from Israel and Pakistan were accepted by the United States as recently as 2002. Individuals from countries that have signed the NPT, however, may still “be excluded on the basis of such things as institutional affiliation or previous history or other political factors such as human rights concerns in such countries.”

The lack of a formal State policy or guidance on this matter has led to differing views among U.S. officials about the countries of origin from which State will approve TC fellows. For instance, Argonne National Laboratory officials told us that they believed State’s policy was to exclude fellows from any country the United States had designated as a state sponsor of terrorism. However, the description prepared for us by State does not explicitly prohibit fellows from such countries. The most recent TC program fellow to study nuclear issues in the United States from one of the U.S.-designated state sponsors of terrorism—Syria—was in 2001.

In addition, the broad nature of the criteria to exclude fellows—including “other political factors” in their home countries—could leave fellowship decisions open to State officials’ subjective interpretation. For example, State officials told us that one country in Asia would no longer be permitted to send TC fellows to the United States because it is considered a wealthy, high-income nation, even though the description of the informal guidelines provided to us by State do not indicate that economic conditions in a TC fellow’s home country are a basis for rejection.

With regard to IAEA’s management of TC fellows, the agency does not have a policy to exclude individuals from certain countries from participating in the TC fellowship program, including individuals from nations about which the United States has terrorism or proliferation concerns. For example, in 2007, IAEA approved 48 fellows and scientific visitors from Cuba, 12 from Iran, 36 from Syria, and 30 from Sudan. IAEA’s data did not indicate the countries and institutes where these fellows and scientific visitors pursued their studies.

We also found shortcomings in IAEA oversight of TC fellowships for potential proliferation concerns—specifically in detecting the possible involvement of former TC fellows in weapons-related research activities after they completed their studies abroad. IAEA officials told us that the agency does not have a systematic process for tracking the status, whereabouts, and activities of former TC fellows to determine, for example, if they remain involved in research related to their TC project, changed institutes, or have immigrated to other countries.

In 2005, however, IAEA officials surveyed fellows from 2001 and 2002 to determine their current activities and their views on the quality and impact of the fellowship program. IAEA followed up with a more in-depth survey of a sample of former fellows from seven countries. IAEA officials told us that they hope to conduct more analysis of former TC fellows, primarily to facilitate networking between former fellows and establish lessons learned for improved implementation of the program, not to determine whether former TC fellows could be involved in nuclear weapons efforts.

Long-Term TC Program Effectiveness Is Limited by Outdated Program Metrics, Financial Resource Constraints, and Sustainability Concerns

IAEA faces several limitations in effectively managing the TC program. Specifically, IAEA has not been able to accurately portray the TC program’s achievements in meeting the development and other needs of member states in a meaningful way because it has not updated and revised the metrics for assessing program results. In addition, the program’s impact is limited by financial resource constraints, including the failure of many member states to pay their full share of support to the TCF. Finally, the TC program’s long-term effectiveness could be undermined by shortcomings in IAEA efforts to monitor how TC projects have been sustained and in recent efforts to sustain the TC program overall by reaching out to new partners and donors.

IAEA Lacks Adequate Metrics to Fully Assess TC Program’s Impact

The goal of the TC program is to help member states achieve their sustainable development needs through the peaceful application of nuclear energy. However, IAEA has not updated and revised TC program performance metrics so that it can more accurately track and assess the program’s overall impact in meeting member states’ needs. Under a 2002 TC program strategy, IAEA established four strategic objectives and 12 performance metrics to assess program performance between 2002 and 2007. These four objectives were (1) establishing greater linkages between TC projects and national development plans and greater government commitment and support to projects; (2) expanding strategic partnerships to improve the TC program’s visibility in resolving development problems; (3) increasing the level of funding for technical cooperation activities; and (4) strengthening the capacity of institutions in member states using nuclear technologies to become more technically and financially self- reliant. The 12 program performance metrics included having TC projects create an unspecified number of new partnerships with development organizations and having an increasing number of member states pay their full target share of funding to the TCF.

IAEA officials declined to provide us with detailed information explaining how these performance indicators were established or data substantiating how they were met. However, according to the TC program’s 2006 annual report summarizing the program’s progress against each indicator, IAEA met or exceeded 6 of the 12 performance indicators, did not meet 1, could not measure 1, and did not provide any assessment information on the remaining 4 performance goals.

The metrics developed for the program in 2002 are not meaningful indicators of program results and, therefore, do not provide sufficient information on the program’s progress in meeting the sustainable development and related needs of member states. For example, the performance metric on member state contributions to the TCF conveys information on program management but does not measure fulfillment of member state needs, such as the number of additional cancer patients treated or the number of new nuclear safety regulations promulgated. Similarly, in its 2007 evaluation of TC activities, IAEA’s internal auditor— the Office of Internal Oversight Services—found that the TC program lacks a robust, consistent process for assessing the effectiveness of TC projects, particularly after projects are completed.

IAEA officials acknowledged these weaknesses in the 2002 metrics, recognized they were out of date, and said that they wanted to develop more effective results-based metrics. However, to date, the TC program has not developed new program objectives or performance measures. The officials noted that a new TC information technology system—the Program Cycle Management Framework—to plan, implement, monitor, and report on TC projects will eventually collect information to assess project results against specific goals and metrics. In addition, according to the 2009-2011 TC program guidelines, the program needs to operate under results-based management principles and emphasize the importance of having program objectives and outcomes be linked to performance metrics to help measure progress in achieving results in technical cooperation.

IAEA officials told us that implementing a system of results-based metrics for the TC program faces challenges—particularly in obtaining reliable baseline information from member states about the scope of the problems or needs they hope to address by participating in the TC program. Without such information, they told us, IAEA cannot establish reliable long-term performance targets. For example, according to a 2007 evaluation by IAEA’s internal auditor, almost half of the project performance metrics in the sample of projects it reviewed were not supported with baseline information and half did not indicate target values.

Many Member States Do Not Provide Financial Contributions to the TCF and Some High-Income Countries Receive TC Assistance

We found that the TC program faces financial constraints and limitations due to, among other things, shortfalls in member state payments to the TCF and high-income nations receiving TC support. IAEA officials told us that the TC program is underfunded, while IAEA’s Director General has commented that program resources are insufficient to keep pace with country requests for support. Although the size of the TCF and overall level of funding paid by member states have increased in recent years, many countries that receive TC assistance still do not pay their full share of support to the TCF that IAEA expects them to contribute. Specifically, the TCF experienced a funding shortfall in 2007 of $3.5 million, or 4 percent, of the $80 million total target budget because 62 member states did not pay their full contributions. Of these 62 countries, 47 states made no payment at all. Appendix IV lists member states and the amounts they contributed to the TCF in 2007.

In addition, 13 member states that the UN defined as high-income countries in 2007—including Israel, Portugal, and Saudi Arabia—received a total of approximately $3.8 million in assistance from the program, or 4 percent of the $93.3 million in total TC disbursements that year. Recognizing that the emphasis of the TC program is on providing nuclear assistance to developing countries, IAEA officials told us that it would be helpful if more developed countries shifted from TC recipients to donors, which could allow the program to provide greater support to developing countries. For example, they stated that some member states have helped ease budget pressures within the TC program by voluntarily reducing the assistance they receive and gradually becoming donors. However, IAEA has not sought to formulate guidelines or criteria for determining when countries should be graduated from further TC assistance, and IAEA officials have not reached a consensus on how to pursue this matter. According to the Deputy Director General for the TC program, IAEA does not seek to retire specific countries from TC support regardless of their financial or development status. Nevertheless, other IAEA officials told us that determining program graduation criteria is a good idea. Appendix II identifies the countries designated by the United Nations in 2007 as high- income and the amount of TCF assistance they received that year.

In addition, IAEA officials told us that broader issues should be considered in graduating high-income or highly-developed countries from TC assistance. Specifically, IAEA officials said that developed nations with more experience on nuclear issues could play a helpful role in providing nuclear expertise to less-developed nations in the same region. According to IAEA officials, this could entail reducing national-level TC project support to developed member states while continuing to provide support to them through regional projects. These officials also asserted that graduating states is complicated because the benefits provided by TC assistance keep countries involved in IAEA, including the safeguards program.

State and U.S. Mission officials told us that State does not have an official position on graduating member states from TC assistance. However, these officials said the idea merited consideration and suggested some countries whose economic wherewithal and level of nuclear development could justify graduation, including Brazil, China, Russia, and South Korea.

IAEA Faces Challenges Sustaining the TC Program

IAEA efforts to sustain TC project results and the TC program overall face several significant limitations and challenges. First, at the project level, IAEA does not conduct systematic follow-up to verify that member states are sustaining the results and activities of completed TC projects. IAEA’s goal in providing technical cooperation is to help countries become technically and financially self-reliant so that they do not require future IAEA assistance to sustain peaceful nuclear skills and technologies. The Deputy Director General of the TC program stated that achieving sustainability hinges on having member states commit adequate financial support, infrastructure, and personnel once the project is completed.

IAEA officials told us that the program does assess sustainability potential of projects in the proposal development phase. As projects are being developed, IAEA uses a planning tool, known as a “country programme framework,” to evaluate how TC project proposals contribute to the host country’s national development priorities and to assess the host government’s likely commitment to the project. However, we found that IAEA does not systematically review completed TC projects to verify whether the project results are being sustained by the recipient country, through government or other support. For example, the TC program does not conduct any assessments 2, 3, or 5 years past project completion, to see whether and how a country is maintaining established TC nuclear technologies and related skills.

Second, IAEA faces challenges in sustaining the TC program over the long term because TC funding is distributed across 18 different technical areas—including nuclear power, nuclear security, food and agriculture, water resources, and human health—making it difficult for IAEA to set clear TC program priorities and to maximize the impact of limited program resources. Appendix V provides a complete list of all the technical areas to which TC program funding was allocated in 2007. Figure 1 shows the percentage of funds disbursed by project area.

According to U.S. Mission officials, this allocation of TC funding across multiple technical areas and the absence of clear program priorities reduces overall program effectiveness. U.S. Mission officials told us that IAEA should work to consolidate these areas and identify four or five future TC program priorities. IAEA officials agreed, but told us that they have little flexibility to set TC program priorities because they must be responsive to member state needs which vary across countries and regions. Nevertheless, TC program officials said they are attempting to promote priority-setting at the project level—for example, by limiting the number of projects member states were permitted to submit in 2008, and by moving away from funding mature nuclear technologies that no longer require development or in which member states have acquired sufficient capability to sustain on their own.

In addition, in 2007, IAEA initiated a fundamental review of the challenges and opportunities facing its programs to 2020 and beyond. As part of this review, IAEA’s Secretariat identified priorities for the TC program and other IAEA programs. IAEA also convened a Commission of Eminent Persons to provide recommendations on the future role and activities of the agency, including the TC program. In its background report to the commission, IAEA identified future TC priorities in three main areas— disease prevention and control, food safety and security, and sustainable management of natural resources and ecosystems—with a lesser focus on a fourth area, industrial process management. However, IAEA officials told us that the restructuring of TC priorities and implementing other recommendations from this review would be contingent on the Board of Governors’ approval.

Finally, IAEA officials told us that meeting member states’ future demands for TC assistance—especially as interest in nuclear power grows—will strain program resources and pose a fundamental long-term sustainability challenge. As a result, IAEA is developing outreach strategies and has created an outreach team to attract the support and involvement of donor organizations and new partners—such as the UN Development Program— in the TC program. However, this effort faces several limitations and shortcomings.

The TC program outreach effort is narrowly focused on attracting donors and partners involved in international economic and social development. Although TC program guidance encourages private sector partnerships, IAEA officials told us that the new partner outreach effort will not extend to the private sector because they believed the level of effort to establish such partnerships would outweigh the expected benefits. Furthermore, while IAEA’s internal auditors have reported on cases where member states successfully obtained private sector support to sustain TC projects—thus alleviating the need for further support from IAEA or the host government—IAEA officials told us that the TC program does not systematically assess TC proposals with respect to their commercial potential. IAEA officials told us that member states are not required to submit information in their TC proposals—such as a market analysis, a summary of business plans, or potential private sector investors in project activities—that IAEA could use to evaluate the long-term commercial prospects of a TC project.

The TC program’s strategy of focusing its outreach primarily on international development organizations carries risks because IAEA is not well recognized as a development organization within the broader development community. According to the Deputy Director General of the TC Department, the development community largely perceives IAEA as a nuclear enforcement body and its development contributions are overlooked or unknown. In addition, some of the previous partnerships the TC program has built with international development organizations have been called into question. For example, a 2007 independent evaluation of the UN’s Food and Agriculture Organization (FAO) concluded that FAO’s long-standing partnership with IAEA on the use of nuclear techniques in food and agriculture has ceased to yield a high return on investment and, therefore, recommended that FAO withdraw future funding from the joint FAO-IAEA unit. Furthermore, according to the U.S. representative to the Standing Advisory Group on Technical Assistance and Cooperation, the TC program faces difficulties in building relationships with development organizations at the project and country levels because it does not have a presence in the host countries to promote the program. For example, this representative told us that the national liaison officers—who serve as intermediaries on TC projects between IAEA and the host governments and collaborating institutes— tend to be technical specialists who do not understand their country’s development needs, do not network with other development organizations, and are not involved in the governmental processes that set national development plans and priorities.

Conclusions

The world today is dramatically different than when IAEA was created over 50 years ago. Therefore, certain IAEA policies related to the TC program, as well as the rights, expectations, and obligations of IAEA member states that are beneficiaries of the program, merit careful consideration and, as appropriate, re-examination. In our view, TC proposals should not be evaluated simply on their technical merits in isolation from political considerations concerning the countries making the requests, particularly since the assistance in question involves supplying nuclear equipment, training, and expertise, some of which is dual-use in nature. In that regard, we believe that State’s policy of not encouraging IAEA to systematically limit TC projects in countries that are U.S.-designated state sponsors of terrorism communicates a mixed message on the acceptability of transferring nuclear technologies and expertise to countries the United States has deemed inherently dangerous.

We recognize that the TC program provides IAEA member states that are developing countries with many benefits and that not every project funded by the program poses a proliferation risk. However, the United States does not have the necessary information available on a timely basis to make sound judgments about the proliferation risks of many of these projects, particularly in the project proposal development phase. A better system, with more complete and timely data provided by IAEA, would help ensure that projects are fully and appropriately vetted by U.S. agencies and those that pose a potential proliferation risk are identified early in the project development process. Until that happens, we will continue to have concerns about the potential proliferation risks posed by TC projects, particularly those linked to countries of concern.

With greater transparency and earlier information from IAEA on TC project proposals, the United States government and other countries could raise and address proliferation concerns with IAEA’s Secretariat before it endorses projects for approval by the Board of Governors. We are also concerned by IAEA’s refusal to share information with the United States and other member states on findings from its internal proliferation reviews of TC projects. Furthermore, deficiencies in State’s record-keeping on TC program matters is troubling because we could not determine what, if any, actions State took to address concerns identified by DOE and the national laboratories.

Regarding TC fellowships, State has not established a formal policy governing the approval of TC fellows from foreign countries interested in studying nuclear issues in the United States. The absence of such a policy has allowed individuals from non-NPT countries and individuals from countries that are U.S.-designated state sponsors of terrorism who obtain visas to study in the United States and potentially acquire valuable information. We also believe IAEA should take steps to improve monitoring of individuals who have completed fellowships, to track their whereabouts and ongoing research, and to determine if the knowledge and information they obtained on TC projects is being applied to strictly peaceful purposes.

Regarding our management concerns associated with the TC program, we believe that all member states receiving TC support should provide their full contribution to the TCF. We also question the need to provide TC assistance to high-income countries that have the apparent economic means to finance their nuclear research and development needs independently. In our view, IAEA could enhance the impact of its limited resources by developing and applying reasonable “means testing” criteria in future allocation of TC funding and consider ways in which high-income countries can be graduated from continued TC assistance. In addition, the metrics IAEA has used to track TC program performance do not provide the United States and other member states with sufficient information on the TC program’s overall value. Development of more meaningful results- based performance measures could allow IAEA to more effectively demonstrate the TC program’s impact.

Finally, IAEA could enhance the impact of the TC program’s limited resources by formally setting priorities for future TC funding, as well as identifying areas that are less urgent because of the availability of mature nuclear technologies and other donors. In terms of IAEA’s outreach to potential new TC donors, we believe that the private sector could be a crucial partner in supporting the TC program generally and in sustaining the results of TC projects so that member states can become technically and financially less dependent on IAEA. In our view, IAEA should also assess TC proposals not only for technical feasibility and host government support, but also for potential private sector support to sustain project activities and results.

Matter for Congressional Consideration

If Congress wishes to make known that the United States does not support IAEA’s policy of permitting TC projects in countries that State has designated as state sponsors of terrorism, or other countries where other concerns persist, it could explicitly require—as it currently does with Cuba and has done in the past with Iran, Libya, and the Territories Under the Jurisdiction of the Palestinian Authority—that State withhold a proportionate share of the U.S. voluntary contribution to the TC program that is equivalent to the amounts of TCF funding that would otherwise be made available to these countries. Alternatively, if Congress wishes to obtain additional information before making this decision, it could require State to report to Congress explaining its rationale for not withholding a proportionate share of the U.S. contribution to the TCF for U.S.-designated state sponsors of terrorism.

Recommendations for Executive Action

To address the range of proliferation and management concerns related to the TC program, we recommend that the Secretary of State, working with IAEA and member states through the Board of Governors, explore undertaking the following eight actions: Establish a formal mechanism to facilitate greater and more timely information sharing on TC project proposals between IAEA and the United States and other countries—including detailed information on the TC proposals themselves, as well as the results of IAEA’s internal proliferation reviews of the proposals—so that proliferation and other concerns can be identified and addressed early in the project development cycle.

Promote a regular and systematic process for obtaining, retaining, and updating information on prior TC project fellows to better track where and how the knowledge and expertise they have obtained is being applied.

Strengthen the TC program’s mechanisms for collecting member states’ contributions to the TCF to include withholding from nonpaying states a percentage of TC assistance equivalent to the percentage of their target rate that they fail to contribute to the TCF.

Establish criteria for determining when member states, especially those defined as high-income countries, no longer need TC assistance in particular fields and when such states could be graduated from further TC support altogether.

Seek to implement new results-based performance metrics for the TC program that establish specific national, regional, and interregional social and economic needs and measure the collective impact of TC projects in meeting those objectives.

Focus the TC program on a more limited number of high-priority technical areas to maximize the impact of program resources.

Encourage the TC program to reach out to private sector entities as part of its new partner and donor development strategy.

Request member states to assess in their TC project proposals the prospects for commercialization of and private sector investment in the results of the projects. Such steps could include requiring information in the proposals on potential business plans, marketing strategies, and strategies for attracting commercial partners once IAEA support has concluded.

Finally, to clarify and improve U.S. oversight of the TC program, we recommend that the Secretary of State undertake the following two actions: Enhance record-keeping and formally document management actions regarding the discussion, action, and disposition of TC project proposals that DOE and the national laboratories identify as having potential proliferation concerns.

Issue formal guidance with well-defined criteria—such as countries designated by State as sponsors of terrorism or gross human rights violators—that State should use as the basis for approving or rejecting TC fellowship requests for nuclear studies in the United States. This guidance could include, among other things, a list of specific countries from which State would not approve TC fellows that could be updated and revised annually, or as other circumstances warrant.

Agency Comments and Our Evaluation

We provided a draft of this report to State and DOE for formal comment. We also provided IAEA with a detailed summary of facts contained in the draft report. State provided written comments on the draft report, which are presented in appendix VI. DOE and IAEA provided technical comments that we incorporated as appropriate.

State strongly opposed the matter for congressional consideration to require State to withhold a proportionate share of the U.S. voluntary contribution to the TC program that is equivalent to the amounts of TCF funding that would otherwise be made available to U.S.-designated state sponsors of terrorism and or other countries of concern. State objected for a number of reasons, contending that (1) it would be counterproductive to a separate recommendation we made in the report encouraging all states to pay their full share to the TCF; (2) it would not stop TC projects in targeted countries because TCF funding is fungible; (3) Congress has exempted IAEA contributions from this type of proportionate withholding; (4) none of the TC projects in state sponsors of terrorism have been shown to have contributed to a WMD program; (5) there are adequate safeguards within IAEA’s Secretariat to prevent TC projects from contributing to a WMD program; and (6) it would negatively impact the ability of the United States to achieve other critical objectives within IAEA.

We do not believe the matter for congressional consideration is unique or unprecedented. As we noted in our report, U.S. law currently requires the withholding of a proportionate share of the U.S. contribution to the TCF for certain projects in Cuba, and has required withholding in the past for Iran, Libya, and the Territories Under the Jurisdiction of the Palestinian Authority. However, in order to give Congress greater flexibility and more information, we have broadened the matter for congressional consideration to give Congress the option of requiring State to report on its rationale for not withholding a proportionate share of the U.S. contribution to the TCF for U.S.-designated state sponsors of terrorism.

Notwithstanding our modification to the matter for congressional consideration, we still disagree with State’s specific objections to it for the following reasons: We do not believe the matter for congressional consideration is counterproductive to our recommendation to strengthen mechanisms for collecting member state contributions to the TCF. That recommendation is geared toward strengthening mechanisms for collecting contributions to the TCF from member states that are receiving TC assistance. The United States is the largest donor to the TC program, providing approximately 25 percent of the TCF annual budget, and is not a beneficiary of TC assistance.

While contributions to the TCF are fungible, we believe there is a fundamental principle at stake. As we described in our report, the United States has applied several types of sanctions limiting foreign assistance and trade to states it has designated as sponsors of terrorism and to other countries. To avoid the appearance of an inconsistent approach and to foster greater cohesion in U.S. policy toward such nations, we believe that it is fair for Congress to consider requiring State to withhold a share of the U.S. contribution to the TCF for program activities in countries that the United States chooses not to engage directly in trade, assistance, and other forms of cooperation.

We are aware that in 1994 U.S. contributions to IAEA were exempted from the law requiring State to withhold proportionate shares of funding to international organizations for programs in certain countries. However, we note that the IAEA exemption was enacted in 1994. In our view, the proliferation concerns about some countries receiving TC assistance— such as Iran and Syria—have increased rather than diminished since that time. Furthermore, we note that since the enactment of the 1994 exemption, the law has been further amended to require State to withhold a proportionate share of funding to IAEA for certain projects in Cuba and for all projects in Iran if State determines that such projects in Iran are inconsistent with U.S. nuclear nonproliferation and safety goals, will provide Iran with training or expertise relevant to the development of nuclear weapons, or are being used as a cover for the acquisition of sensitive nuclear technology.

We do not believe that State can assert with confidence that TC projects have not contributed to WMD programs in state sponsors of terrorism. The absence of evidence showing that TC projects have assisted nuclear weapons development in U.S.-designated state sponsors of terrorism does not, in our view, constitute proof that such countries have not exploited TC assistance to advance possible weapons development skills and activities. Based on findings in our report—including the limited information available to DOE and the national laboratories on TC projects and the inherent dual-use nature of some nuclear expertise and technology—we believe it is difficult to say with confidence that TC projects are not contributing indirectly to weapons-related knowledge and expertise in such countries.

We do not have the same level of confidence as State in the safeguards within IAEA’s Secretariat to prevent TC projects from contributing to weapons development. As we stated in the report, we were unable to assess the effectiveness of IAEA’s internal process for reviewing TC proposals and projects for proliferation concerns because IAEA’s Secretariat declined to provide us with basic information and documentation regarding the results of its reviews. Furthermore, as described in the report, IAEA’s Secretariat approved at least one TC project proposal—involving the Iranian heavy water reactor at Arak—that State later objected to.

Finally, neither we nor State can conclude with certainty how other states might react to an increase in the United States’ proportionate withholding of funding to the TCF and how this would affect U.S. ability to achieve other objectives within the agency.

State agreed with 7 of our 10 recommendations to improve TC program management and oversight. It neither agreed nor disagreed with the three other recommendations that called on State, working with IAEA and member states through the Board of Governors, to explore (1) establishing a formal mechanism to facilitate greater and more timely information sharing on TC proposals between IAEA, the United States, and other countries; (2) strengthening TC program mechanisms for collecting member state contributions to the TCF, including withholding a percentage of TC assistance to recipient countries that fail to pay their target contribution; and (3) establishing criteria for determining when member states no longer require TC assistance and could be graduated from further TC support.

Regarding the recommendation concerning the establishment of a formal mechanism to facilitate greater and more timely information sharing on TC project proposals between IAEA and the United States and other countries, State noted that it would be difficult to implement through IAEA’s Board of Governors because TC proposals are considered confidential between IAEA and the recipient state. State commented that a more achievable goal could be to work with IAEA to ensure that it publishes a complete listing of project proposals earlier. Because TC projects can involve transfer of equipment, technology, and expertise that could potentially contribute to nuclear weapons development, we continue to believe that TC proposals demand the highest level of scrutiny, transparency, and information sharing. We question why details of TC proposals are considered confidential, and believe the United States and other major donors should have a full understanding of the proposals that they are being asked to support through their TCF contributions. Finally, as noted in the report, we found that the quantity of information about TC proposals currently available to DOE and the national laboratories is insufficient in many cases—especially in cases where DOE and the national laboratories obtained only lists of proposal titles—to make accurate determinations of potential proliferation risks. It is unclear whether State’s suggestion to work with IAEA to publish the complete listing of proposed projects earlier would result in sufficient details being provided to DOE and the national laboratories to allow them to more reliably assess proliferation risks.

On our recommendation to strengthen the mechanisms for collecting member state contributions to the TCF, State commented that the rate of payment to the TCF by member states has improved in recent years. However, as we noted in the report, many states receiving assistance are still not paying their full share of contributions to the TCF. We believe there is room for continued improvement and that mechanisms should continue to be strengthened toward that end. We believe the recommendation is sound and should be implemented.

Finally, concerning the recommendation to establish criteria for determining when member states no longer require further TC assistance and could be graduated from further TC support, State observed that a proposal for graduating higher-income TC recipient states based on their per capita gross national product was put forward in 1997. State noted that one member state objected to graduating countries based solely on such criteria. We recognize the political and practical challenges of implementing a graduation strategy for member states receiving TC assistance. However, as noted in our report, both State and IAEA officials supported the principle of graduating countries that no longer require TC assistance. Moreover, our recommendation does not identify specific graduation criteria or specify that a member state’s income ranking be the sole factor to serve as the basis for graduating a state from further TC support.

As agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to interested congressional committees and Members of Congress, the Secretary of State, and the Secretary of Energy. In addition, this report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-3841 or aloisee@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VII.

Appendix I: Objectives, Scope, and Methodology

To review the International Atomic Energy Agency’s (IAEA) Technical Cooperation (TC) program we assessed the (1) extent to which the United States and IAEA have policies limiting member states’ participation in the TC program on the basis of nuclear proliferation and related concerns; (2) extent to which the United States and IAEA evaluate and monitor TC projects for proliferation concerns; and (3) limitations and challenges in IAEA’s management of the TC program. We employed several methodologies to address these objectives.

Our review of the TC program covered the years 1997 through 2007. We chose this period because our previous report on the TC program reported on TC programmatic and financial data through 1996. We interviewed key officials and analyzed documentation, such as cables, presentations, financial information, and reports and analyses of TC program issues from the Departments of State (State) and Energy (DOE). State officials also provided us with relevant IAEA documentation and information, such as copies of IAEA’s annual “white books” identifying TC projects approved by IAEA, as well as information on specific TC projects from IAEA’s “TC- PRIDE” database. We also interviewed officials in the Nuclear Regulatory Commission’s Office of International Programs who participate in U.S. interagency meetings on IAEA TC issues. In addition, we met with representatives from five national laboratories involved in the DOE Interdiction Technical Analysis Group, a multilaboratory team providing DOE with technical analysis of proliferation-related issues, including the TC program. We also visited the Oak Ridge National Laboratory (ORNL) to obtain documentation and interview current and former ORNL staff involved in previous and ongoing assessments of TC proposals and active projects for potential proliferation concerns. In addition, we visited the Argonne National Laboratory to interview representatives who provide support and analytical services to State on TC issues, organize training seminars for foreign nationals involved in TC projects, and facilitate TC fellowships for foreign nationals to study nuclear issues in the United States.

We also interviewed officials at IAEA headquarters in Vienna, Austria, including representatives from the TC Department and other IAEA departments, including the Departments of Management, Safeguards, and Nuclear Safety and Security; the Office of Internal Oversight Services; and the Office of External Relations and Policy Coordination. We reviewed and analyzed information provided by IAEA officials, including presentation slides, annual reports, internal and external auditor reports, and TC project brochures. We also reviewed speeches and other statements by IAEA officials on the TC program and related IAEA issues. IAEA officials provided us with data on the number of TC projects by year, country, and technical area, as well as financial information on the TC program over the past decade. We interviewed knowledgeable IAEA officials on the reliability of these data, including issues such as data entry, access, quality control procedures, and the accuracy and completeness of the data. We determined that the data were sufficiently reliable for the purposes of this review.

Furthermore, we interviewed officials at the U.S. Mission to International Organizations in Vienna (U.S. Mission) regarding TC program policies and processes. We also met with officials from the Canadian Permanent Mission to the International Organizations in Vienna who work on IAEA issues to gain their perspectives on the TC program. We also conducted interviews with several nongovernmental experts who have monitored IAEA and developments in the TC program, and met with and obtained documentation from the U.S. representative to IAEA’s Standing Advisory Group on Technical Assistance and Cooperation.

We discussed U.S. and IAEA policies and criteria with State and IAEA officials on the extent to which countries are limited from receiving TC assistance because of proliferation and related concerns. We also reviewed (1) speeches, articles, and other statements made by IAEA officials; (2) annual State reports to Congress on IAEA assistance provided to some states that the United States has identified as countries of concern; (3) speeches and statements by U.S. officials; and (4) cables between State and the U.S. Mission outlining U.S. policy toward the TC program. We obtained and analyzed the lists of countries that (1) are designated by the United States as state sponsors of terrorism, (2) are party to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), and (3) have comprehensive safeguards agreements and additional protocols in force with IAEA. We cross-referenced each of these lists against IAEA financial records to determine how much TC support has been provided to countries that the United States has listed as state sponsors of terrorism, are not party to the NPT, or do not have comprehensive safeguards or additional protocol agreements in force with IAEA.

To assess the extent to which the United States and IAEA evaluate and monitor TC projects for proliferation concerns, we interviewed State and DOE officials regarding their TC program review processes. We also interviewed representatives from five of the U.S. national laboratories involved in past and current evaluations of TC proposals and projects for proliferation concerns. Through DOE, we obtained and analyzed information from ORNL and Los Alamos National Laboratory (LANL) to determine the numbers of TC proposals the national laboratories reviewed each year between 1998 and 2006. We reviewed and verified these data with DOE and the national laboratory officials, and discussed and verified the proliferation risks DOE and the national laboratory officials identified in specific TC proposals. We used IAEA records of approved TC projects to determine whether TC proposals that the national laboratories had identified as having possible proliferation risks were approved by IAEA. Because of IAEA policies that restricted our access to data and related information on TC proposal and project reviews by IAEA’s Safeguards Department, we were unable to assess the effectiveness of IAEA’s internal review of TC proposals and projects for proliferation concerns.

To determine the challenges and limitations in IAEA’s management of the TC program, we interviewed officials from State, Argonne National Laboratory, and IAEA, as well as the U.S. representative to IAEA’s Standing Advisory Group on Technical Assistance and Cooperation. We obtained and reviewed relevant IAEA documentation addressing TC program metrics, such as TC program guidance and strategy documents, IAEA internal audit reports, and meeting reports by IAEA’s Technical Assistance and Cooperation Committee. To assess financial resource challenges facing the TC program, we analyzed financial data from TC program annual reports between 1997 and 2007—including annual budgets of the Technical Cooperation Fund (TCF), annual contributions by member states to the TCF, and amounts of annual TC assistance provided to recipient countries and territories—to determine the level of funding countries contributed to the TCF and the amounts some countries received from the TC program over the past decade. We used the United Nation’s (UN) annual Human Development Reports to determine country income classifications. For each country, we cross-referenced TC financial data against country income classifications to determine the amounts of funding countries designated by the UN as “high-income” contributed to and received from the TC program. Additionally, we reviewed TC program annual reports to determine the technical areas covered and funded by the program.

As initially agreed with your office, we intended to assess the extent to which TC projects have contributed to the safety and security of nuclear installations around the world. Toward that end, using data provided by State from IAEA’s TC-PRIDE database, identifying all TC projects funded in the nuclear security and safety fields since 1997, we developed a judgmental sample of 22 TC projects (17 national projects and 5 regional projects) to serve as the basis for our assessment and interviews with relevant IAEA officials. We selected this judgmental sample by focusing on projects completed since 2005. Using the data provided by State, we calculated the average cost of national-level nuclear security and safety projects completed since that time and selected the 17 projects that exceeded this average cost. The 5 regional projects in our judgmental sample were selected by identifying the highest budget project in each of the five TC program regions completed since 2005. We briefed IAEA officials on our project selection methodology, and they agreed that it was fair and unbiased. However, IAEA officials declined to make additional information available to us on these projects and did not provide us with an opportunity to interview relevant IAEA officials who oversaw these projects to discuss their impact and results. As a result of these restrictive policies, we were unable to sufficiently assess the TC program’s contributions to improving the safety and security of nuclear facilities around the world.

We conducted this performance audit from December 2007 to March 2009, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: 2007 Technical Cooperation Assistance Recipient States and Territories

Total 2007 TC funding received

IAEA member state?

U.S.- designated state sponsor of terrorism?

NPT state party?

Comprehensive safeguards agreement in force?

Additional protocol in force?

IAEA member state?

U.S.- designated state sponsor of terrorism?

NPT state party?

Comprehensive safeguards agreement in force?

Additional protocol in force?

IAEA member state?

U.S.- designated state sponsor of terrorism?

NPT state party?

Comprehensive safeguards agreement in force?

Additional protocol in force?

IAEA member state?

U.S.- designated state sponsor of terrorism?

NPT state party?

Comprehensive safeguards agreement in force?

Additional protocol in force?

IAEA member state?

U.S.- designated state sponsor of terrorism?

NPT state party?

Comprehensive safeguards agreement in force?

Additional protocol in force?

As nuclear-weapon states, China and Russia are not obligated under the NPT to accept comprehensive safeguards on their nuclear activities.

Appendix III: Numbers of Technical Cooperation Proposals Reviewed by U.S. National Laboratories, Categorized by Level of Proliferation Risk, by Year, 1998 through 2006

Appendix IV: 2007 Member State Contributions to the Technical Cooperation Fund

Appendix V: 2007 Technical Cooperation Disbursements, by Agency Program

Executive management, policy-making and coordination

Appendix VI: Comments from the Department of State

Appendix VII: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

In addition to the contact named above, Glen Levis (Assistant Director), Eugene Gray, Simon Hirschfeld, and William Hoehn made key contributions to this report. Other technical assistance was provided by Jeffrey Phillips, Carol Herrnstadt Shulman, Jay Smale, and Jeanette Soares.