Naval Nuclear Propulsion: A Two-Track Solution for IAEA Safeguards Integrity

By Tariq Rauf*

VIENNA | 19 November 2025 (IDN) — More than four years have elapsed since the matter of the proliferation of nuclear-powered submarines reemerged after a gap of nearly four decades to place the International Atomic Energy Agency (IAEA) squarely in the cross-hairs of a serious policy and legal conundrum.

It also highlighted related loopholes in the Nuclear Non-Proliferation Treaty (NPT) and its associated comprehensive safeguards agreement (INFCIRC/153), implemented by the IAEA as the sole competent, autonomous, and international nuclear verification organisation.

For more than six decades, the IAEA has been the global gold standard for nuclear verification, ensuring the peaceful uses of nuclear technology and materials. But since September 2021, the IAEA has been stumped by a self-inflicted controversy stemming from its dealings with the nuclear submarine acquisition programmes of AUKUS (Australia, the UK, and the US) and Brazil’s PROSUB “indigenous” project.

Without recapping the details here, I refer readers to some of my previous writings (here, here, here, and here), and IAEA Information Circulars (INFCIRCs) 1091 and 1293, raising concerns about the provision in the comprehensive safeguards agreement (CSA) that seeks to exempt naval nuclear fuel and naval nuclear propulsion reactors from full-scope application of IAEA safeguards thus leading to a two-tier system that breaches universality and non-discrimination of international nuclear verification pursuant to the NPT.

Summary of the Challenge

The proliferation of nuclear-powered submarine (NPS) programmes in NPT non-nuclear-weapon States (NNWS)—specifically Australia and Brazil, with potential future interest from Japan and South Korea—creates a significant challenge to the integrity and effectiveness of the IAEA safeguards system.

It was principally Italy and Germany that intervened in the negotiations on the NPT in 1967-1968 regarding the defect in the NPT that fails to include the entirety of nuclear activities by NPT NNWS, limiting safeguards to “peaceful nuclear activities,” thus excluding military nuclear activities unrelated to nuclear weapons.

These same countries then were instrumental in the negotiations on the comprehensive safeguards agreement (INFCIRC/153) during 1970-1972, to include paragraph 14 on the “non-application of safeguards to nuclear material to be used in non-peaceful activities” (IAEA Safeguards Glossary 2022, Section 2.15) – that includes nuclear-powered submarines using weapon-grade highly-enriched uranium (HEU), which the IAEA characterises as “direct use material” for nuclear weapons.

While the use of nuclear material for naval propulsion is described as a non-proscribed military activity for safeguards purposes, it nonetheless requires NNWS to negotiate with the IAEA to invoke paragraph 14 of the CSA. As alluded to above, this provision or “loophole” provides for the non-application (suspension) of routine safeguards on nuclear material when it is used in a non-proscribed military activity, such as nuclear-powered submarines, thus creating a “safeguards gap” and thereby a potential “diversion risk” (IAEA Safeguards Glossary 2022, Section 2.5) of enriched uranium fuel. The resulting key impacts include the “loss of continuity of knowledge” over safeguarded nuclear material and the political precedent set for other NNWS.

Key Impacts on IAEA Safeguards

The introduction of nuclear-powered submarine programmes by NNWS has two primary impacts on the IAEA’s ability to provide credible assurance of non-diversion of nuclear material:

1. Creation of a “Safeguards Gap” and Diversion Risk

The core challenge lies in Paragraph 14 of the standard CSA (INFCIRC/153), which includes a provision that enables a State to withdraw or exclude special nuclear material from routine safeguards for use in a non-proscribed military activity, such as naval nuclear propulsion.

• Loss of Continuity of Knowledge: When nuclear material (e.g., HEU, or high-assay, low-enriched uranium) is fabricated into a naval nuclear reactor unit and installed in a submarine, the IAEA loses its ability to conduct routine in-field verification and monitoring. This loss of “continuity of knowledge” must be re-established when the material is eventually removed and returned to a peaceful activity (e.g., for storage or disposal).
• Highly Proliferation-Sensitive Nuclear Material: Naval nuclear propulsion reactors use enriched uranium fuel, which can be weapon-grade and the most proliferation-sensitive nuclear material. While Australia’s AUKUS plan claims to rely on pre-packaged, fueled-for-life (33 years) naval propulsion nuclear reactor units to mitigate risk, the transfer and handling of HEU from a nuclear-weapon State (NWS) to a NNWS in the quantities involved (tens of thousands of kilogrammes) would be unprecedented and necessitate extraordinarily robust verification. This to assure the international community that the nuclear material is not diverted to a weapons program. Brazil’s nuclear submarine acquisition programme, reportedly, is based on low-enriched uranium (LEU) fuel, below 20%, which still would require careful monitoring for safeguards purposes.

2. Precedents and Political Challenges

The two current cases—Australia’s AUKUS and Brazil’s PROSUB indigenous programmes—undoubtedly will set precedents that will affect all future NNWS seeking naval nuclear propulsion, including potential aspirants like Japan and South Korea.

• Setting a Global Standard: The arrangements for the non-application of safeguards being negotiated between the IAEA Secretariat and Australia and Brazil are critical for all NPT NNWS and for the Agency’s safeguards system. In the beginning, the three AUKUS partners unilaterally ascribed unto themselves the authority to set the standard for the non-application of safeguards (IAEA INFCIRC/1037), but later relented under sustained international criticism. While the IAEA Director General has stated that the arrangements will be bilateral and not set a “model” or “template” for the non-application of safeguards, these arrangements will inevitably set, if not influence, the expected standard for non-proliferation compliance in this sensitive area.
• Politicisation of the Agency: Deliberations, particularly on AUKUS, have become highly politicised and contentious within the IAEA Board of Governors. Member States, including China and Russia, but also some others in the Asia-Pacific region, have expressed their concerns that the process risks undermining the NPT and creating a “loophole” for nuclear non-proliferation, potentially damaging the Agency’s technical, impartial safeguards mandate.
• Pressure on Other Aspirants: Should the AUKUS and PROSUB nuclear submarine acquisition programmes proceed, these could encourage other militarily advanced NNWS, such as South Korea and Japan (both with advanced nuclear and maritime capabilities), to explore their own naval nuclear propulsion programmes, thereby multiplying the existing safeguards challenges globally. In fact, on 29 October 2025, US President Donald J. Trump announced that South Korea would construct nuclear submarines in the Philadelphia Shipyards in the US – creating another challenge for the IAEA.

Current Status of IAEA Negotiations

Both Australia and Brazil are continuing confidential technical negotiations with the IAEA to finalise the specific arrangements required under their safeguards agreements (Article 14 for Australia (IAEA INFCIRC/217) and Article 13 for Brazil (IAEA INFCIRC/435).

AUKUS Negotiations

• Legal Basis: Australia formally requested the commencement of negotiations on an Article 14 arrangement in March 2023 (IAEA INFCIRC/1079). The trilateral agreement among AUKUS partners (ANNPA) mandates that no nuclear material transfer can occur until this arrangement is in place with the IAEA.
• Focus of Consultations: The technical discussions are based on how the IAEA can verify the integrity of the nuclear material (HEU) when it is withdrawn from safeguards for use in the submarine, and how verification will be reapplied when the sealed unit is eventually returned for disposal (likely to the US or UK).
  • This includes developing non-intrusive verification methods that could provide confidence in non-diversion without compromising classified military information.
  • Australia is offering the Agency voluntary transparency measures and confidentiality.
  • The latest IAEA report notes that the Agency has been in discussions with Australia on technical aspects and modalities to facilitate possible verification and monitoring activities to be conducted by the Agency; the structure of the nuclear Material Balance Area (MBA); ‘safeguards by design’; modalities for complementary access and the collection of environmental samples at relevant locations; as well as the implementation of voluntary transparency measures, in relation to Australia’s naval nuclear propulsion programme. But to date, the IAEA has not released any generic details on these aspects of safeguards activities related to the non-application of safeguards.
• Political Status: The Director General (DG) of the IAEA has repeatedly stated that the process is within the Agency’s safeguards legal mandate, and is being handled on a bilateral, confidential and technical basis. He has committed to transmitting the final Article 14 Arrangement for “appropriate action”, as opposed for “approval”, to the IAEA Board of Governors, once the technical agreement is finalised. This is intended to assure Member States that the Board will have an opportunity to consider the final negotiated agreement between the IAEA and Australia and to recommend any changes, if required.
• Timeline: The process remains complex and ongoing. The first Australian-built SSN-AUKUS is not expected until the early 2040s, giving the IAEA and Australia several years to finalise the arrangements.

PROSUB Negotiations

• Legal Basis: Brazil initiated discussions in December 2021 with the IAEA on Special Procedures (IAEA GOV/INF/2024/13) under Article 13 of its Quadripartite Agreement (IAEA INFCIRC/435).
• Focus of Consultations: The discussions focus on the long-running indigenous nuclear-powered submarine development programme, specifically on how to monitor domestically produced LEU fuel and how safeguards will be applied (and then non-applied) to the indigenously designed naval nuclear propulsion reactor core and fuel.

• The latest IAEA report notes that technical discussions continue between the IAEA and Brazil on the design information for the land-based prototype naval nuclear reactor; the fuel to be used in the land-based prototype naval reactor, and nuclear-powered submarine; and verification techniques and equipment that could be applied to the nuclear fuel to be used for the land-based prototype nuclear reactor and nuclear submarines. As in the case of AUKUS, for PROSUB, the IAEA has not released any generic details regarding these aspects of safeguards activities related to the non-application of safeguards.

• Timeline: Brazil’s naval nuclear propulsion programme is claimed to be entirely sovereign and has been running for decades—though reportedly the Brazilian Navy has close cooperation with its French and German counterparts including in the area of undersea vessels. While its first submarine is expected to be launched earlier than Australia’s, the IAEA negotiations are focused on the technical verification of Brazil’s unique, indigenous nuclear fuel cycle.

The outcomes of both the AUKUS and PROSUB negotiations will critically shape the interpretation and implementation of the NPT and its safeguards system for any future NNWS seeking naval nuclear propulsion.

This is especially concerning as there has been no discussion in the IAEA Board, nor has the IAEA Secretariat produced a technical report, inter alia, on the definitions, meanings, and implementation of the provisions governing the non-application of safeguards on naval nuclear propulsion.

Thus, for more than four years, the IAEA Board of Governors has had agenda items on naval nuclear propulsion for its meetings, but the Board continues merrily on its way in the dark and in ignorance of how the non-application of safeguards would be interpreted and implemented in practice. Not surprising, as Board is bitterly divided on certain critical matters and is deteriorating into a politicised talk shop!

A Way Forward

Since the use of nuclear material for naval propulsion is considered a non-proscribed military activity excluded from the application of comprehensive safeguards, the verification challenges include ensuring that the enriched uranium fuel is never diverted during the decades-long period during which it would be off-limits to routine IAEA nuclear material accountancy, inspections, and the continuity of knowledge.

A possible model to consider in these regards is described below.

Verification During the Initial Phase (Withdrawal from Safeguards)

The most critical safeguards activity would take place before the nuclear-powered submarine becomes operational, and the enriched nuclear fuel (LEU/HEU) is withdrawn from routine safeguards and inspections.

• Pre-Transfer Verification: Pursuant to INFCIRCs 217 and 435, the IAEA has the authority and mandate to verify the total quantity and isotopic composition of unsafeguarded nuclear material (HEU/LEU) in the State designated for naval nuclear propulsion, and of any exports of such material. In the case of AUKUS, before it is transferred from the US or UK and loaded into the naval reactor unit designated for Australia. And, in the case of PROSUB, before it is loaded into the naval nuclear reactor. This to ensure that the exact quantities and isotopic composition of nuclear material (HEU/LEU) subject to non-application of safeguards is known to and accounted for by the IAEA.
• “Sealed Power Unit” Integrity: In the case of AUKUS, the weapon-grade HEU fuel will be contained within a complete, welded, and sealed naval nuclear reactor unit (a “lifetime core” of about 33 years) supplied by the US or the UK. The IAEA should apply relevant technical containment and surveillance (C/S) measures, including unique tamper-indicating seals and remote monitoring cameras, at the point of fuel fabrication, loading and transfer, to ensure that the reactor unit’s integrity remains intact before and during installation in a nuclear-powered submarine during its construction. In the case of PROSUB, similar procedures should apply, though Brazil’s nuclear submarines will require at least three, if not more, refuellings during their service life. As such, the IAEA would need to reapply these procedures each time the submarine undergoes reactor refuelling.
• Advance Notification: Australia is required under Paragraph 14 of its CSA (IAEA INFCIRC/217), and likewise Brazil under Paragraph 13 of its safeguards agreement (IAEA INFCIRC/435), to provide the IAEA with advance notifications relating to elements of the provisions for non-application of safeguards, inter alia, including of the total quantity and isotopic composition of unsafeguarded nuclear material, nuclear material’s intended use and the dates it will be taken out of safeguards and projected to return to safeguards.

Verification During the Operational Life (Non-Application of Safeguards)

During the operational life of nuclear-powered submarines, the IAEA is unable to conduct any on-site inspections, as the vessels are classified military platforms. Any verification, therefore, would rely on indirect and non-intrusive methods.

• Reliance on Containment and Surveillance (C/S): The primary mechanism is the physical integrity of the sealed naval nuclear reactor unit.
  • Unit Integrity Monitoring: In the case of AUKUS, the naval nuclear reactor unit is designed to be fuelled for life (about 33 years). Verification would need to focus on checking that the sealed reactor unit inside the submarine has not been accessed or tampered with. This could involve ultrasonic or radiographic techniques performed during port visits to confirm the hull and reactor compartment remain structurally intact and sealed—this could be accomplished through agreed managed access procedures. In the case of PROSUB, the verification activities would be more complex but essentially similar, with access provided during refuelling in port.
  • Continuous Accounting: Both Australia and Brazil must keep the IAEA informed of the total quantity and composition of the enriched nuclear material at all times, including its operational status, even though the IAEA cannot verify its location at sea.
• Voluntary Transparency Measures: Both Australia and Brazil should commit to implementing voluntary transparency measures to build confidence beyond the minimum legal requirements. These measures may include:
  • IAEA Access to Port Facilities: Allow IAEA inspectors access to the port-based maintenance facilities or naval base areas where the nuclear submarines are maintained, utilising managed access procedures.
  • Technical Consultations: Engage in regular, in-depth technical consultations with the IAEA to discuss the safety, security, and material accounting procedures for the naval nuclear programmes.
• Commitment to No Domestic Fuel Cycle: Australia’s commitment to not develop sovereign enrichment, reprocessing, or fuel fabrication capabilities is a key non-proliferation assurance. The IAEA would use the Additional Protocol (AP) to maintain the Broader Conclusion that there are no undeclared nuclear materials or activities within the country, independent of the nuclear submarine material itself. In the case of Brazil, its uranium enrichment activities are under safeguards, though compared to IAEA access to centrifuge cascades for example in Iran or in URENCO facilities, Brazil imposes certain restrictive procedures. Nonetheless, the IAEA annual Safeguards Implementation Reports (SIRs) have not reported failures to verify in Brazil.

Verification at the End-of-Life (Re-Application of Safeguards)

The IAEA should reestablish “continuity of knowledge” when the nuclear-powered submarine reaches end of life and is decommissioned, with the removal of the spent (HEU/LEU) nuclear fuel unit.

• Final Verification: The IAEA should verify the naval nuclear reactor unit’s integrity before it is disposed of (likely by being returned to the US or the UK, in the case of AUKUS). This verification could confirm that the highly irradiated, spent nuclear fuel within the sealed unit matches the declared inventory that was originally withdrawn from safeguards.
• Disposal Assurance: Both Australia and Brazil must specify clear, verifiable procedures for the safe and secure return/disposal of the HEU/LEU spent nuclear fuel in a facility subject to routine IAEA safeguards and monitoring.

Conclusions and Next Steps

In dealing with the AUKUS and PROSUB nuclear-powered submarine acquisition programmes and the related non-application of safeguards to naval nuclear propulsion, the IAEA Secretariat has been facing a delicate balancing act.

On the one hand, the IAEA must fulfil its technical and legal obligation to negotiate ironclad arrangements under existing mandates (INFCIRC/217, Paragraph 14; and INFCIRC/534, Paragraph 13).

On the other hand, the IAEA must simultaneously restore political and technical confidence that the Agency is not opening or facilitating a “loophole” or “gap” in the universal and non-discriminatory application of comprehensive safeguards that would threaten the global nuclear non-proliferation regime.

The Agency’s strategy must be two-fold: technical excellence and institutional transparency.

• Dedicated Technical Expert Group (IAEA Internal): The IAEA Secretariat would have established a technically competent internal working group, in the Division of Safeguards Concepts and Planning (SGCP) in the Department of Safeguards, composed of the Agency experts inter alia in nuclear material accountancy, non-intrusive verification (NIV) technologies, and reactor physics. This technical group’s function could be to:
  • Develop NIV Standards: Formulate concrete, verifiable technical requirements for confirming the integrity of naval nuclear reactor units (e.g., ultrasonic methods, radiation signature analysis) without compromising military secrets.
  • Define Nuclear Material Accountability: Precisely define the methodology for establishing the total quantity and composition of the enriched uranium (HEU/LEU) fuel before it is subject to non-application of safeguards and verifying the spent fuel when it is returned, ensuring programmatic continuity of knowledge.
  • Safeguards by Design: The IAEA must ensure that the naval nuclear reactor programmes must include defined “safeguards by design” features to optimise non-diversion scenarios and managed access monitoring practices as described above.
  • Issue a Technical Report: The IAEA Secretariat should prepare and release a non-confidential Technical Report, available to all Member States, detailing the generic technical challenges of naval nuclear propulsion and non-application of safeguards, and the types of verification and managed access procedures and methods that could be employed to provide assurances of non-diversion. In doing so the IAEA Secretariat could demonstrate its proactive technical competence and leadership. In this exercise, the Agency’s Standing Advisory Group on Safeguards Implementation (SAGSI), could dig its head out of the sand and recommend some technical measures instead of wasting its energy on safeguards at sea on maritime commercial vessels – these obviously would be subject to normal safeguards.

• Restoring Confidence in Impartiality and Process

The IAEA needs to restore and rebuild confidence, move away from bilateral secrecy, and engage the Agency’s membership, especially the Board of Governors, with transparency and accountability, as required under its Statute, and as outlined above.

• Adopt a Two-Tiered Consultative Framework:
  • Tier 1: Open-Ended Policy Forum (External): The IAEA needs to establish a Board-level consultative forum (such as a modernised Safeguards Committee 22/24/25) open to all interested Member States. The objective would be to build consensus on the interpretation and general policy principles for the non-application of safeguards, without negotiating the specific AUKUS/PROSUB arrangements. These consultations should explicitly conclude that neither the AUKUS nor the PROSUB arrangements could be unique solutions tailored to the two countries’ naval nuclear propulsion programmes and would not constitute templates for other States to follow. This consultative process should also address the technical and political concerns about a “loophole” by bringing the debate out of the shadows and ensuring the credibility of the process, which is presently lacking. This is essential to counter fears of creating a universal “loophole” in comprehensive safeguards.
  • Tier 2: Confidential Bilateral Negotiations (Internal): The IAEA Secretariat to continue its safeguards confidential discussions with Australia and Brazil, regarding the Subsidiary Arrangements to their respective safeguards agreements about the non-application of safeguards to non-proscribed military activities, regarding, inter alia, design information, managed access procedures, applying the general principles and technical standards agreed upon in Tier 1.

• Commit to Full Transparency Post-Agreement: The IAEA Director General would be well advised to go beyond merely submitting the agreed arrangements to the Board for “appropriate action”, which remains undefined and nebulous, and commit to a more transparent review process. As noted above, Member States should be provided with a substantial Technical Report, and an open-ended consultative process should be set up involving all interested Member States. Continuing with the current practice of lack of transparency is unsustainable.

The UN General Assembly recently confirmed the Agency’s essential role on 14 November, when 146 of its currently 180 Member States present in the chamber voted in favour of the annual resolution commending the indispensable functions of the IAEA.

Unfortunately, two founding Member States of the Agency, which are also permanent members of the Security Council and depositary States of the NPT, chose to vote against the IAEA. Earlier, the 2025 IAEA General Conference was unable to adopt its annual resolution on “Strengthening the effectiveness and improving the efficiency of Agency safeguards“—safeguards being one of the Agency’s two core functions.

The Agency’s governing bodies are becoming highly politicised over key safeguards and other matters. Some observers are beginning to question the competence and ability of the Board of Governors to address key safeguards matters on technical grounds, eschewing partisan positions. This cannot be good for the IAEA’s functioning and reputation. The Board and Member States must return to honestly and faithfully honouring their commitments and obligations under the Agency’s Statute.

The IAEA Secretariat and Member States in leading with demonstrated technical rigour and supplementing it with structured, inclusive transparency, can neutralise the increasing political accusations of bias, and reaffirm the Agency’s vital role as the sole impartial, technically competent, supreme guardian of the NPT/IAEA safeguards system.

*Tariq Rauf is a former Head of Verification and Security Policy, reporting to the Director General, at the International Atomic Energy Agency. He has been following the matter of naval nuclear propulsion and its impact on IAEA safeguards since 1987. [IDN-InDepthNews]

Image: Nuclear submarine. Source: freepik.com