The International Atomic Energy Agency is facing new realities and challenges as the world approaches the next century. Three fundamental challenges have emerged:

• The first concerns the role of nuclear energy for sustainable development - an issue that embraces issues associated with nuclear and radiation safety, waste disposal, the physical protection of nuclear materials, and measures against the illegal trafficking in nuclear materials.
• The second concerns the IAEA′s ability to credibly verify non-proliferation pledges, and its role in verifying future arms-control measures.
• The third concerns the role of multilateralism, a challenge accentuated by the end of the Cold War, and is witnessed in the declining financial resources of the UN system and other intergovernmental organizations.

These challenges point to dual needs - the need for continuity and the need for adjustment.

The IAEA′s basic mandate is to encourage the development and practical application of nuclear energy for peaceful purposes; regulate its use through appropriate safety, verification, and physical protection measures; and assist in the transfer of the technology to developing Member States of the Agency. Thus, the IAEA acts as a center for international cooperation for progress and as an instrument for the consolidation of international security.

Nuclear Power. Nuclear power is regarded by many Member States as having an important role to play in the energy mix over the next few decades. All States are in favour of using renewable energy sources, but the contribution of renewables to global energy demand today is limited to about 2%. With the growing demand for energy and electricity, and under the shadow of the greenhouse effect and acid rain, the nuclear power option will continue to be explored or resorted to in many parts of the world. How much it will contribute in each State's energy mix will depend on many variables - the availability of other energy sources, the existence of adequate industrial infrastructure, public acceptance, and other factors. The decision to make use of nuclear power is a national decision. The role of the IAEA is to cooperate as appropriate with those Member States who want to make use of it. These areas of cooperation include aspects related to the assessment of energy sources available to them; to technical support in areas of technology, quality assurance, and training; and to assistance as required in the fields of safety, waste disposal, and physical protection.

Nuclear Applications. Outside the electric power area, other applications of nuclear energy are essential in many fields, including health, agriculture, and hydrology. The IAEA will need to focus on those applications where the nuclear techniques offer a comparative advantage over other available techniques.

Safety. The key to the use of nuclear energy in all its forms is safety - safety of nuclear installations, and safety with respect to radiation protection, waste disposal, physical protection, and illicit nuclear trafficking. New safety-related conventions have been or will be adopted by States, raising the need of implementing them. Important in this respect is the need to accelerate practical assistance to States in areas of nuclear legislation; the establishment of infrastructures for radiation protection and for waste management and disposal; and advisory safety services for nuclear plant operations and radiation and waste practices.

Verification and Safeguards. The verification of nuclear energy′s peaceful uses contributes to international security in many parts of the world and has become an important component of the national security profile in more than 180 States, and essential for nuclear trade. All States, therefore, should support and participate in the active management of the system. States have supported efforts for strengthening the IAEA's safeguards to provide more comprehensive assurances and a more cost-effective system. Serious consideration now should be given to funding activities in the IAEA′s regular budget related to the physical protection of nuclear materials and combatting illicit nuclear trafficking. Other developments in the verification field - including the emergence of regional nuclear-weapon-free-zones and the Agency′s possible verification of nuclear disarmament - signal ways in which the IAEA can further contribute to the world′s security goals.

Technical Cooperation. The transfer of technology for development should continue to be a major function of the IAEA in its own right, and not as an adjunct to other functions. The programme should be responsive to the needs and priorities of Member States. Its new directions are welcome and should be pursued further. They include the alignment of technical assistance with the State′s economic and social development plans; ensuring that the peaceful application of nuclear technology is the main target of assistance, and that capacity-building is an integrated component; and working towards more efficient delivery of assistance, including the use of centers of excellence in developing countries. The programme should have its own intrinsic value as an important vehicle for sustainable economic and social development, and it should be able to compete for resources available within the development finance community.

Institutional Arrangements. In the coming years, no dramatic increase in financial resources to the Agency is expected. The reality calls for more focused IAEA programmes and more clearly defined priorities where the Agency′s core competence and comparative advantage are clearly established. The IAEA will have to shed itself of activities that are obsolete or could be more efficiently implemented by others in and outside the UN system. The Agency will require better and new financing arrangements, particularly for technical cooperation and for new verification tasks. Further steps will be needed to streamline the Agency′s structure and in areas of management reform - reform in the sense of UN Secretary-General Kofi Annan's view that it is a process and not an event. The aim will be to save resources that can go into programme activities. Another objective will be to employ more women and staff from developing and under-represented countries, and to achieve more interaction between the Agency and its Member States, as well as with civil society, particularly the development and arms-control communities.

Global Cooperation for Progress and Security. As we move ahead, it will be important to make the IAEA more effective and efficient, and more responsive to the needs of its Member States. This could be achieved by avoiding a North-South divide, or other divides, and by equal commitment by all to the twin objectives of the Agency: international cooperation for progress and consolidation of international security. These are objectives that are worth pursuing in earnest.