The Cash-Strapped Agency at the Heart of the Iran Deal

In his public-relations blitz to defend the Iran nuclear deal, Barack Obama has repeatedly insisted that the agreement is not based on trust between Iran and the United States. “It’s not enough for us to trust when you say that you are only creating a peaceful nuclear program. You have to prove it to us,” he told Thomas Friedman of The New York Times. “And so this whole system that we built is not based on trust; it’s based on a verifiable mechanism, whereby every pathway that they have is shut off.”

The “verifiable mechanism” to which the U.S. president is referring consists of inspections of Iranian nuclear facilities by the International Atomic Energy Agency (IAEA). If the IAEA confirms that Iran is abiding by the strictures of the Joint Plan of Action between the United States, China, Russia, Germany, the United Kingdom, France, and Iran, then sanctions against Iran will be eased, potentially ushering in a new geopolitical era in the Middle East. If the IAEA detects Iranian cheating, those sanctions could be resurrected, endangering the elaborate framework to limit Iran’s nuclear program that negotiators constructed over the course of years.

This places a relatively small UN agency based in Vienna at the heart of one of the most important diplomatic breakthroughs in a generation. Is the IAEA up to the task?

The IAEA is often referred to in shorthand as the “UN nuclear watchdog,” but its profile is not exactly commensurate with the financial resources at its disposal. Like many UN agencies, the IAEA funds its operations through a combination of assessed and voluntary contributions from member states. Member states are assessed dues based on a scale pegged to each country’s gross national income. This funds what is known as the “regular budget,” which pays for things like weapons inspectors, safeguards, and administrative costs. The United States is the largest contributor to the IAEA, funding about 25 percent of the regular budget. Japan comes in second, at about 10 percent. The poorest member states generally pay less than 1 percent each. (On top of the regular budget is a $90-million Technical Cooperation Fund that is supported through voluntary contributions and mostly pays for development activities, including using nuclear technology to improve agricultural outcomes and supporting radiation therapy and other medical programs that rely on nuclear physics in the developing world.)

Last year, the IAEA’s regular budget was just over $350 million. That’s less than the budget of the San Diego police department. Iran is roughly 1,700 times larger than San Diego by territory—and about twice the size of Texas. Of course, the IAEA’s budget funds not just inspections in Iran, but activities around the world.

The nuclear-inspection regime in Iran is going to be expensive, among numerous other logistical, technical, and political challenges. In a press conference on Tuesday, following the signing of the final accord, IAEA Director General Yukiya Amano estimated that the Iran portfolio has cost his agency $1 million per month since November 2013, when Iran initially allowed limited inspection of certain sites as a condition to launch diplomatic talks. In the same press conference, Amano said it would take some time to budget the costs related to maintaining a pool of some 150 inspectors to deploy to Iran and monitor Iranian nuclear activities from afar.

The problem with all this is that IAEA member states have pressured the agency to rein in spending in recent years. A policy of “zero-real growth” imposed by the IAEA’s 35-member state Board of Governors has been in place for several budget cycles. In its 2015 budget report, the agency described a host of activities that it has undertaken to cut expenditures, even as the responsibilities placed on it by countries and international organizations have increased. These included, among other things, introducing a “paper smart” policy and optimizing “the use of technical and office supplies.”

No one should begrudge an office for being more judicious about using the copy machine. But the fact that the IAEA is touting cutting down on office supplies as a way to reduce spending suggests that the agency is operating under intense budgetary pressures.  

In a speech last year, Amano pressed his case for more resources to carry out the IAEA’s activities around the world. “The number of nuclear facilities coming under IAEA safeguards continues to grow steadily—by 12 percent in the past five years alone,” he said. “So does the amount of nuclear material to be safeguarded. It has risen by around 14 percent in that period. With 72 nuclear-power plants under construction, and many additional countries considering the introduction of nuclear power in the coming years, that trend looks very likely to continue.”

Still, despite these new duties, Amano admitted that he didn’t expect much relief. “Funding for the agency has not kept pace with growing demand for our services and is unlikely to do so in the coming years,” he said.  

These funding challenges are not unique to the IAEA. They represent a UN-wide problem. Member states keep asking international bureaucrats to do more with less. While this may make sense from a fiduciary standpoint, it has potentially harmful real-world implications. Like the IAEA, the World Health Organization (WHO) has been under extreme pressure for several years to cut programs and spending. When the Ebola outbreak struck West Africa last year, the World Health Organization was tasked with leading a robust response. But because of budget cuts—amounting to $600 million since 2010—a hobbled WHO lacked the personnel and tools to meet those expectations.

UN Peacekeeping faces similar burdens. Today there are more than 100,000 blue helmets deployed to 16 missions worldwide—more than at anytime in UN history. The budget for UN Peacekeeping is about $7 billion. That’s a lot of money. But for comparison’s sake, it’s less than one-tenth of what the United States will spend in Afghanistan and in “overseas contingency operations” this year. UN peacekeepers in tough places like South Sudan or Mali routinely lack basic equipment, like helicopters, that would maximize their reach and effectiveness.  

Given the high-profile nature of the Iran deal, the IAEA’s member states will likely be more willing than not to fund the extra expenditures required to implement the agreement. But at some point, this political will may fade. Unless countries allow the budgets of international organizations to expand with the increased responsibilities placed on them by those very same member states, these agencies may not be able to fulfill their promise. For the IAEA, that may mean a decreased ability to detect nuclear proliferation—in Iran and beyond.