DR. MOHAMED ELBARADEI: Thank you very much for your kind introduction and to you.

I think my wife and my two children make it very clear that the whole idea about the Nobel Peace Prize will not go to my head. So I - I am constantly reminded that I'm a mortal, and I have a lot things - I have a lot of faults.

But on a serious note, I think, sure, it has - the timing of the prize has been excellent for the Agency, for myself. We are going though a very sort of difficult time in terms of charting a new landscape for global security. After the end of the Cold War, 15 years after the end of the Cold War, when we talk about the new world order, we are nowhere there. You know, we are not. I think we lost our sense of direction.

We continue to have reliance on nuclear weapons. We continue to see more modernization of nuclear weapons. We continue to see people talking about the possibility of using nuclear weapons, you know. We continue to have this basic dynamic that some countries say nuclear weapons are essential for our security, but it's off limits for everybody else, which I've been saying this is absolutely not sustainable.

You just cannot - as I put it in a colloquial way, you cannot dangle your cigarette from your mouth and be telling everybody else not to smoke. It's not going to happen, you know.

And it becomes much more difficult right now, with the dissemination of technology, because the technology out of the tube, so we are in constant search of a new system of collective security that is rooted, in my view, on the (inaudible) human family, human security, but not necessarily at all on the nuclear deterrent.

We're no ways there. I don't think we're doing - we're not focusing on these issues. We're still very primitive in our approach to security. It's basically carrying a big stick, or club if you like.

With that backdrop, it's a very - the timing of the Nobel Peace Prize has been absolutely fantastic for us, because it gives us a platform. It gives us credibility. It gives us the ability to speak to the silent majority. Not to governments necessarily, but to - the prize has given a vote of confidence from what I call the silent majority, the people of the world who are saying: You are doing the right thing. You haven't, obviously, achieved it yet, but you are trying. And keep trying, because we don't like what we see.

DR. ELBARADEI: Bill, I think - personally, I think it's very adequate. Our mission is - it's basically we are dealing with the technology. Like any other, or many technologies, it has a good side. It has a dark side.

DR. ELBARADEI: Nuclear energy provides 15 percent of the world's electricity now. Nuclear energy is used - radio isotopes are used (inaudible) in agriculture, industry. I think no one of us now does not know a person who hasn't gone to the hospital for radiotherapy or nuclear medicine. So it has a lot of uses, in agriculture, to improve productivity of crops, managing groundwater. So we have a lot of uses of nuclear energy, and that's what we do.

When you say that we promote nuclear energy, I think I would like to clarify that. We never tell any country you should go and use nuclear energy. That's not our role. Our role it to make sure countries have all available information needed to make appropriate choices, you know, and if it is decided to use nuclear energy, particularly for nuclear power, where there are concerns of safety, security, and nonproliferation - if a country were to decide to use nuclear energy, then we come in with our second role as regulator, to make sure they have a safety structure, that we have the security structures, and they have accepted the verification role of the Agency to make sure they are not misusing nuclear energy to develop bombs.

There is no contradiction. I mean, I don't see that. My colleagues don't see that. We are partly the carrying out - we are trying to use nuclear energy for development. We're partly a policeman or sometimes we are now called a watchdog, but I always make sure that we are - people know the difference between a watchdog and a rabid dog. We bark, but we don't go out and bite, you know, unless there is a good reason for it.

DR. ELBARADEI: I think we are operating on a shoestring budget. There is no question about that. And I've been - a couple of years ago I was - said - put my foot down and said, unless I get additional resources, we are not able to do our job. And at that time we got like a 10 percent increase in our safeguards budget.

We still could do a much better job with additional money. You are right. I mean, we - our budget is less than any football club somewhere in - here or in Europe, or a small police department in a small city.

But - however, in fairness, we also get a lot of additional support from members. I mean, we have a support program, for example, that - all over the world to help us develop the new technologies that we can use for verification purposes. So there are a lot of indirect resources that come our way, but definitely, we - we can be much more efficient, much more effective, you know if we have additional resources.

I'd like to - verification - in many ways right now is technology driven, you know. We are on satellite monitoring, for example, which has become a very important tool for making sure that we - we have all the oversight to - that countries are not building an undeclared nuclear facility somewhere. So satellite monitoring is key. We would like to have much more resources to buy our own satellite imaging.

Environmental sampling - I mean, you know it's fantastic to have a swipe somewhere of water, vegetation, you know, soil, and then you will know whether a country has been doing undeclared activities even five, ten years ago, enriching uranium or processing plutonium.

Remote monitoring - in many cases right now we are sitting in our offices in Vienna, and we can see what is happening in any nuclear facility thousands of miles away.

These are all new technologies. They are expensive, and the more we can get these technologies, and the more money we have to develop R&D, because we are moving against a - a target that - that - keeps moving - that keeps moving forward, and we need to catch up with that moving target, and that, as I said, requires - requires technology, requires trained people.

And we, again, train the inspectors on how to get money. We spend a lot of time and resources making sure that the inspectors are aware of what's going on, when we go to facilities they're asking the right questions, they have the proper observation skills.

So the short answer - it's not short. Yes, we can do a much better job if we could get the resources. It's very funny, but if you ask most other governments, they will tell you proliferation of nuclear weapons is the number one national security threat, but that somehow doesn't trickle down. You go to the Treasury accountant, and they - you know you get the accountant, and you have to haggle with them about how much money you get. But so far I think we are managing, yeah.

DR. ELBARADEI: I think you should ask that question to the US.

DR. ELBARADEI: Bill, I think this is one of the most important questions. I think as I just mentioned to you, in a couple of days I will be in L.A., actually spending time with John Negroponte and, you know, other intelligence and nuclear experts. And that is a key, because we rely on information.

I mean, if we do proper verification with all the technology we have, with all the skilled personnel we have, we need to know where to go. You know? I cannot just go with an inspection team to Canada and be able to expect to see whether there are any undeclared activities, unless I'm aided by some information.

Lots of this information comes, you know, from open sources, but - a lot of it comes from you here in Monterey, where you monitor open source information, but a lot of it comes from intelligence, and intelligence means information coming from government. Intelligence means information coming from government that has their own agenda, you know, and our job is just to make sure that - that we make a clear distinction between what are authentic information and what are misinformation.

We get lots of misinformation, you know, all the time. And we need to - you know, we need to separate the wheat from the chaff, and that's not an easy thing.

So we have to authenticate the information, and then we have to go through a due process, you know, with - with the member states you know, just make sure that: Here is the information we have. Can you verify this information to us? That - which means that we need to go places. We need to interview people. We need to see documents.

And we have to be very careful that there is a due process, that we are not - you know, people are not proven - are not declared guilty, you know, before we go through the due process.

That's what we got in Iraq. I mean Iraq was - again we acted on all the information available to us. We had not seen any indications that Iraq was resuscitating its nuclear weapons program. We have looked at all the data on them procuring maraging steel for centrifuge technology, that they are buying uranium from Niger, and it was not difficult for us to conclude that these are fake information, and that's what we have declared.

I mean, that's our job. I mean, we - it's becoming much more difficult, because we know a lot of our work right now makes the difference between war and peace. And we need to - you know, we need to do our job as objectively as humanly possible.

We - we never can provide guarantees, and in Iraq we never said, I can vouch that Iraq has absolutely no nuclear weapons program, but I was able to say that, after a lot of inspection, we didn't see a whiff of a nuclear weapons program.

And you have to make a distinction between your personal convictions, personal feelings - I mean, nobody liked Saddam Hussein. Everybody knew that Saddam Hussein was a brutal dictator. But that's different from our job, which was: Do they have a nuclear weapons program or weapons of mass destruction? And if they don't, you know, what do you do about it?

You know, I still - you know - I look at the television every day, and I see that over 100,000 Iraqi civilians have died since - in the last three years. And I ask myself every day if that's the way we want to go in getting rid of every dictator. I mean -

DR. ELBARADEI: Again, Iran is difficult and quite complicated, but hopefully, you know, in doing Iran, we should have learned some lessons from Iraq. We should have learned that we should not jump the gun. We should have leaned that we should be very careful about assessing our intelligence or the information available to us.

We should - we should have learned that we should try to exhaust every possible diplomatic means to solve the problem before thinking of any other enforcement measures and I hope that some of these lessons have been learned. I keep reminding everybody that these are the lesson they have to be aware of.

I think what Iran - we know that Iran has developed a knowledge of the so-called fuel cycle, how to enrich uranium, but that is not synonymous with saying that this is a weapon program. A lot of countries are enriching uranium for peaceful programs without necessarily using it for weaponry.

Iran has developed that program and started to develop that program in the mid '80s, you know, during the war with Iraq. Whether they developed that program with the intention of converting it later on into a weapon program or not, that's a question of intention, which is very difficult to assess. We have not seen a linkage, necessarily, between their program or activities and a parallel weapons program.

We haven't also seen any production of nuclear material in Iran today. All what we have seen in Iran is experiments with gram quantities, milligram quantities. To develop a weapon, as you know, you need significant quantities of highly enriched uranium, highly enriched uranium or plutonium. That we have not seen - we have not seen in Iran.

Our assessment is that there is no imminent threat, if you want to call it - there is no clear and present danger, you know. We - we still have lots of time to investigate that. We still have lots of time to negotiate with Iran in the international community.

The issue is basically a security issue. So people - when you say Iran possibly is developing a nuclear weapon program, you really have to ask yourself why country X is trying to develop nuclear weapons. And the question most of the time is simply a sense of insecurity, you know, and people need to understand that you cannot deal with symptoms. You have to deal with the cause.

When a country feels insecure, they usually look at the big boys, and the big boys keep telling them, you know, we need nuclear weapons because nuclear weapons are very essential for the - for our security. But when you see the North Koreans or Iraq before the war, or Libya trying - attempting at least to acquire nuclear weapons, you should understand that this is - this is a normal human proclivity, that - for societies to see a role model, you follow that role model.

DR. ELBARADEI: Bill, Iran has - has been conducting undeclared activities for 18 years in violation of their obligation to report these activities to the IAEA. Their argument - and again, I repeat, their argument - that they had to go underground because they were under sanctions, you know, which brings again another issue. Would the sanctions help you know, A, or hurt in the long run? It delays, but it doesn't - it doesn't really solve the problem.

However, that obviously created what I call a lack of confidence or confidence deficit, and that's why the international community is asking Iran to go through a rehabilitation period. Telling Iran that you will get all that you need for your power program, peaceful power program, but you should take a pause in producing your own highly enriched uranium. Because we know that if a country to enrich uranium and have the capacity to, they can move into developing a weapon in a matter of months, should their security situation change. In other words, the key component of developing nuclear weapons is to have the material that can go into that weapon.

And what the international community is telling Iran right now: Hold your horses for a number of years. Do not develop your own enrichment technology until confidence is restored, until the international community feels that you are not really after a nuclear weapon.

The Iranians are ready, at least in principle, to hold the industrial activity of producing uranium. They were ready in principle to have - to be part of an international consortium outside of Iran. I think people are talking about Russia, for example. And one of the stickiest issues is still the question, whether Iran would continue to have R&D, research and development, on enrichment in Iran, and that is one of the most controversial issues still separating the Europeans and the US from Iran; Iran insisting that they should continue to have some R&D activities, and the Europeans and the Americans are saying no, you should not even have R&D, because that will allow you to have the knowledge, you know, to - which you can use in the future.

I think, personally, and as I have been saying, that question is now somewhat moot, because Iran has already acquired the knowledge, as we have seen months ago. They have demonstrated that they can enrich uranium at a low level. They might not have perfected the technology, but they have the basic knowledge.

That's an issue that needs to be basically discussed. It is being discussed this week. There is a meeting of the foreign ministers of three European countries, Russia, China, and the US, in fact, a couple of days from now, on Thursday. And hopefully there will be a package offered to Iran, a package of - I don't like the word "incentive," but a package of - what you need for a comprehensive solution.

You know, as I said, this is an issue of security in the first place. So you need to address the security concerns. You need to address the whole issue of sanctions that has been going on since '79. You need to address their need for conversion technology, nuclear technology, trade agreement, and in return, get a commitment from Iran to hold-up production of enriched uranium at a large scale, to accept full, robust verification by the Agency.

I'm still hopeful that an agreement could be reached. You mention - you mention whether Iranian leadership is ready. Well, Iran, in many ways, you know, unlike any other country I would not name, has a variety of views, you know, from the hardliner to the liberal to the moderate.

What we need - and I think the majority of the leadership so far is still interested in a negotiated solution, still interested in normalizing relationships with the US in particular. The Iranians are negotiating with the Europeans, but their ultimate aim is to have a normal relationship with the US, the principal, as you call them, you know, because when it comes to security, it's only the US who can really address the security concerns of Iran, can address the regional security in the Middle East.

And that's why I've been saying for a couple of years now that a European solution to the Iranian issue will have to have a US engagement at a certain level in that process. The sooner we get the US engaged in that dialogue, the better chances that we will have a solution to the Iranian issue.

DR. ELBARADEI: First, Bill, I'm not that pessimistic that a solution cannot be found if both sides are ready to have - to understand where the other party is coming from, and to be able to take the - the necessary compromise.

I mean, in any negotiation you cannot get 100 percent of what you want. You need to focus on your priorities, and you need to understand - the dynamics of the situation, and you need to find a solution which everybody feels is fair.

I always say the only real solution is a negotiated solution. I mean, you can't - if you can't - you know, I'm very strongly skeptical of the whole idea of sanctions, escalations, because - particularly in this issue, because escalation and sanctions in Iran would simply lead to a, you know, retaliation from the Iranian side, and you'll go into a spiral of both sides trying to hurt each other. It would be terrible in the Middle East because - and I also would like to avoid, obviously, a repeat of North Korea.

When you push a country into a corner, and the country will say, well - when you push a country into a corner, you are always giving the driver's seat to the hardliners, you see, and you need - you know, again, this is the problem of negotiation tactics.

And you need always to merge with that silent majority in the middle, the people who are and would like to live, have a peaceful life, interact with the rest of the world, and enjoy their computer software, enjoy their iPod. (Laughter).

And you need - but that - the minute you try to isolate them, put them in a corner, call - name them names, you are already giving the driver seat definitely to the hardliners. So that's what we need, obviously, to avoid in Iran.

Again, the lessons we have learned from North Korea, that you paint a country in a certain - in a certain image, you try to isolate it, the country will walk out of they system and will come back and say, we have nuclear weapons. And then you have a much more serious problem on your hands.

If Iran were to move out of the Nonproliferation regime altogether, if Iran were to develop a nuclear weapon program, we clearly will have a much, much more serious problem on our hands. I mean, Iran right now is a very influential country in the Middle East.

You look around in the Middle East. Whether you look in Iraq, you look at Afghanistan, you look at the Palestinian territories, you look at Syria, Lebanon, it's a total mess, you know, everywhere you look, and you have - you cannot afford to add another - add oil to this, you know, fire we have right now in the Middle East.

What we need, is to use Iran as the beginning of adopting a cool-headed, rational approach to resolve the issue of the Middle East, the sense of injustice, the sense of humiliation, you know, that feeling that they are being treated unequally.

And I guess that brings us to the whole issue of terrorism, which is one you are working in. Terrorism is not a system of people feeling poor at all. It's a feeling of people losing hope, losing the sense of any opportunity, feeling humiliated. I think I have come to realize when people feel humiliated, that's when they go bananas. You know, that's when you get a lot of extremists.

So in resolving Iran you need to make sure that you are not adding to that perception, you know, that the Arab world - that the Moslem world is treated unfairly, and then you create a more fertile ground for some of these extremist groups, who are, by the way - are quite interested to acquire nuclear weapons, which is much more dangerous than any country, in my view, acquiring nuclear weapons, because a country with command and control systems responds to the so-called deterrents. They know if they use nuclear weapons, they would be pulverized. A terrorist group, if they have nuclear weapons, they will simply use it. This is part of their ideology. They are ready to sacrifice their life in the name of whatever ideology they pursue.

DR. ELBARADEI: I told my Indian colleague that they should give me an Indian honorary citizenship for all the things I have been saying about India.

(Laughter).

But I told him also that I'm not saying that because I have a particular relationship with India, but I'm saying - what I'm saying is because of where I'm coming from.

Let's just see what you want to achieve. Let's see what - you know, when the NPT was concluded in 1970, you know, the idea was you have five nuclear weapons states at that time, you know, the Russians, US, China, France, and the UK, who are recognized as nuclear weapons states, and also with the commitment that they will move toward nuclear disarmament. So this was a state of transition that - the five nuclear weapons states will negotiate in good faith, that's the language of the treaty, to move to nuclear disarmament.

This is 30 years ago, and we still have today 27,000 warheads in existence. And you can tell me whether this is really a good reflection of negotiating in good faith toward nuclear disarmament, but that's the background.

I mean the idea was that every other country would join the NPT as a non-nuclear weapons state with a commitment not to have nuclear weapons, India - Pakistan and Israel, you know, have taken the position from day one that the treaty is discriminatory, because it would - recognize countries as weapons states, you know, and everybody else as non-nuclear weapons states. So it creates asymmetry in terms of their security.

India has said that the NPT as presently formulated has been - does not serve our security interests and continues to be outside. They have now, neither of them - or the other two - have not violated any legal obligations, because they've said up front, we are not part of that treaty.

The regime, again, if I speak now in my capacity as a lawyer, is not mandatory. It's not - you know, it's based on voluntary admission or voluntary adherence to the regime.

All right. For 30 years you have tried to treat India, Pakistan, and Israel as a pariah, and I should say three years ago, even before this India-Pakistan - India-US deal three years ago, I - I spoke very much in favor of bringing these three countries as partners and not as pariahs, you know, and I can't see - how we will benefit as an international community of treating one sixth of the world, you know, the largest democracy, India, as a pariah, you know, in - when it comes to interaction on providing them clean energy.

It's also not - to me, it is very - when you address your relationship with a country, you know, India, for example, it has - the policy has to be a coherent policy. The US/India relationship is a very close relationship in every respect. Only when it comes to providing India with advanced, clean nuclear energy, then we are saying no, you - this is off - off limits, because you have not joined the NPT.

But we know that India is not going to join the NPT any day. India is not going to join the NPT tomorrow. India is never going to join the NPT, to be blunt, because India would only give up its nuclear weapons program as part of a global arms control agreement, as part of an agreement that includes China, which that's where India looks for security, includes Russia - includes all the other five nuclear weapons states.

So the fundamental question we have to address, you know, whether we continue to say to India, you know, we will not deal with you in providing you with clean energy, which they, by the way, badly need, because they have 5,000 people - 500 million people below the poverty level, and we just talked about poverty, extremists, we need to uplift these people from the problem - from the poverty situation.

You need to put India - if India is not to get that modern, clean, safe - nuclear power, they will have to rely on indigenous technology, as they have been doing, which is not of course to compare with the modern, western technology. India will then have to rely on probably coal, which is not very clean, because you don't have very clean coal, or they have to rely on expensive oil.

So this deal, as I see it, on the one hand, is a deal about energy. It provides India with clean energy. It also makes India come in close, as a partner to the nonproliferation framework, not the Nonproliferation Treaty. India committed itself under that deal to separate their weapon program from the civilian program. They're going to put the civilian program under IAEA verification.

India committed itself to be party to the suppliers group guidelines - and that's where the terrorism issue, that India will commit itself to make sure that it will not export anything that can lead to proliferation of nuclear weapons.

And by the way, India's record on nonproliferation is much better than most other European, and even I would say the US, when we have seen under the A.Q. Khan network lots of companies engage in illicit trafficking.

DR. ELBARADEI: Well, Bill, again, we can spend time on India, but let me - let me say that particularly after 9-11, you know, we have come to realize that we need - our Iraq experience, our Iran experience - and we have come to realize that the NPT system as we know it needs to be adjusted. We need to develop a new framework.

I have been speaking to that issue for a while. I believe, you know, that you cannot continue business as usual. You have to start really taking concrete steps on nuclear disarmament. You know, the weapons states, if you want the other countries to follow through, you cannot just say: Do as I say and not as I do. That's, as I say, not sustainable, because export control as such is no longer a barrier. The technology - people now have the technology.

I have been saying that as a result of our experience in Iran, all the sensitive nuclear technology, the ability to produce enriched uranium or plutonium has to be under international control - regional centers, international centers.

I have been saying, as I said before the Iranian deal, that we need to put all our heads together. We cannot continue to say you haven't really done what we want you to do. That's India, and therefore we'll continue to ignore that you are weapons state.

India is a weapons state. I mean, I can tell you in that - you know, couple of years ago the talks before the India agreement - I had a talk with President Bush, and I said, you know, to me the idea of recognizing a country as a weapons state is a fiction.

You know, if a war were to erupt tomorrow between India and Pakistan, are we going to say this is not a nuclear war because we don't recognize it as a nuclear weapons state? They are nuclear weapons states. You know, they have nuclear weapons, and we have to address that reality.

To me, the best is to try to bring them forward, try to not to keep them as outcasts, but to say I would like you to be part of our efforts to, you know, to get our world to be a safer world.

And granted, we are not, at this stage, at this day disarming India, nor are we disarming the US, nor are we disarming the Russians, or the Chinese, but India, you know, is a weapons state. Only for Indian state, you know, that it can make - you know they haven't really just - as I said, they haven't really got into the NPT and decided to go out. They said: Our security, like the Russians, like the Chinese, needs nuclear weapons, and as to when these countries decide to get rid of nuclear weapons, we will also do the same.

So it's an interim step for bringing India closer. It's not bad to get India to separate their weapons program from their civilian program. It is not bad that we put some safeguards on their civilian program.

By the way, we are doing the same in the US, in Russia, with - in weapons states we are doing some verification. We know that this is not basically to ensure they don't have weapons, but we are trying to get them used to be treated like other countries, you know, to be accepting international verification.

And India, it is correct, resolution 1540, they are a set of obligations but the supplier group is much more stringent but there is a different psychology. There is a different psychology between being treated as a partner and being treated as an outcast. And I can't see, for the life of me, how we can continue, as I said, to treat India as an outcast.

This is one billion people. They are - you know, highly advanced in every respect, and we need to bring them in, and join forces with me in making sure that terrorists will not get nuclear weapons, in making sure that no other countries will get nuclear weapons, in making sure that India will also when arms control negotiations start, will join the CTBT, the treaty that prohibits testing, the treaty that prohibits production for weapons purposes.

But I would - in return for giving India the energy they need, and also helping India to develop, I think helping India to develop, you know, is - to me, is very important in terms of addressing the causes of insecurity that we are facing today.

So it is in no way an agreement that aims to get India to disarm. It is in no way a perfect agreement. It's an agreement that, in my view, from safety, from security, from technology, from bringing a giant country into the fold, is a win-win situation. That's what I call it. People disagree with me, but that's where I stand.

DR. ELBARADEI: I like that description.

DR. ELBARADEI: Well, I think - I think what needs to be done, again, and as I said, the weapons sates have to lead by example. There is no way around that simple truth. And until they send a message that they are really serious about their commitment - they have a legal commitment under the 1970 Non-Proliferation Treaty to move toward nuclear disarmament. Until they show in concrete steps that they are really serious about nuclear disarmament by taking specific steps.

Some of the steps is, as I said, why do we still have 27,000 warheads? You know, why can't we eliminate thousands of these? Maybe you can start talking hundreds, but not 27,000 fifteen years after the end of the Cold War. Why do we not have a treaty that bans the testing?

I mean, as you know, the US Senate has decided to veto or to reject the Comprehensive Test Ban Treaty, which I think is very unfortunate because, you know, if you are moving toward nuclear disarmament, you do not want to develop more qualitative - you know, qualitatively improved nuclear weapons.

You need a comprehensive test ban. Why are we still trying to develop - produce nuclear material for weapon purposes? I mean, we know - you know much better than I that we have tons and tons of excess plutonium, excess highly enriched uranium where the US and Russia do not know what to do with it. You know, it's just there, you know, posing a security risk from the terrorist standpoint. Why do we continue to produce it?

The United States insists so far that a cut-off deal could not be verified because it is not verifiable. I disagree, because we do verification of enrichment, we do verification of - of plutonium production in Japan, for example. So we are in essence, you know, in practice, verifying a cut-off treaty, which is essentially making sure the country will not produce enriched uranium or plutonium.

Even if the treaty - the enemy - the best is the enemy of the good, as they say. Even if the treaty is not perfectly verifiable, it's still much better to have the verification mechanism. We have, for example, the Biological Convention right now, which is, as I was told, biological agents, biological weapons with the improvement in bio-technology in the last few years and in the next few years Yet a protocol to verify the Biological Weapons Convention was shut down, you know, by the US at that time, you know, a few years back.

Again, you know, even if we don't have a perfect verification system, it is still better to have a verification system which delays, which makes it difficult - to cheat, which gives you a window to look into the activities of a country, whether it's biological, whether it's nuclear, whether it's chemical.

So nuclear weapons states need to show that they are really seriously committed to nuclear disarmament, and not just through, you know, rhetoric but through concrete action reducing that number of nuclear weapons, having a comprehensive test ban treaty, having a treaty that bans the production of fissile material.

Even until you have these treaties, I don't see why you cannot have a moratorium. For example, all of the saying for the next ten years we are not going to test, we are not going to produce the nuclear material.

And then ultimately, you know, if you want to - if you really want to be serious about nuclear disarmament, you have to look at what kind of security system can replace reliance on nuclear weapons. I mean, very little has been done in this area. And there again, I fault, you know, the think tanks, that academia, for not, you know - we are the ones, you know, the social scientists and nuclear physicists who have brought this into being, nuclear weapons. We should be the ones who also should try to find a system where every one of us can be secure without necessarily having an arsenal with nuclear weapons which is - we are reaching - we are reaching a point today where I think Kennedy's prediction is very much alive. Either we are going to have - you know, move to nuclear disarmament or we are going to have 20 or 30 countries with nuclear weapons, and if we do have that, to me, this is the beginning of the end of our civilization.

DR. ELBARADEI: Bill, I think the future is really the young people. The more I deal with government, the more I get more pessimistic. There is clearly a sense of cynicism, which is everywhere, which doesn't really make you feel very good.

Once in a while I need to go and recharge the batteries, if you like. The last week I was at Johns Hopkins, you know, giving the commencement speech. I'm here today in Monterey. Tomorrow I'm at Stanford. And that's really where I get the hope from. I mean, young people are clearly seeing, you know, that this is not the kind of future they want to inherit. They do not want to continue to live under that - you know that threat of nuclear, you know, holocaust.

And they know, you know, through their travel, through their, you know, luckily through the Internet, that we're all part of the same human family, that our security system should be people-centered, as we call it, and not just based on borders, languages, nations.

And so they - I think if we - you know, if we continue to talk to them, continue to bring them on board, we definitely are going to have a different system of security.

You're doing a lot of work here. I'm trying to do a lot of that. We are trying to, you know, to have a younger generation in the Agency. I am trying to make sure that all - the mature people are retiring as fast as they can (laughter), and replace them - including myself - and replace them with people who have different visions, you know, people who believe in the so-called butterfly effect, that, you know, whatever happened, you know, in Europe, you can find it's roots in the Middle East, you know.

I think, Aida, my wife, has been telling me about the six steps of separation, you know - six degrees of separation, the sociologists, who are basically saying that you can reach anyone in the world, you connect with anyone in the world through the six degrees.

So we are - the more we are conscious of how much connected we are, the more we are - the more we are conscious that we are in the same boat, the more I think we will approach our security in quite a different way.

And I think the young people, as I said, they are quite different, and so I am doing my best. Help me to - to bring on board as many young and bright people, because that's what we need Bill for the future.

DR. ELBARADEI: Well, I'd like, obviously, to get - to get more legal authority to go places, you know. I mean, the so-called any-time-any-place inspection, obviously, would be ideal. You know, people need to understand that - countries need to understand this is not encroachment on their sovereignty, but it is, in fact, protection of our - of their sovereignty.

But again, the whole concept of sovereignty is something we can talk about. The idea of sovereignty based on border separation doesn't mean very much right now. I mean, we are much connected in so many ways that borders, governments, you know, are losing a lot of their meaning, frankly, today, you know. So much more authority on verification.

I'd like to get, obviously, much more resources to help people, you know, in making new use - in using nuclear energy for development. I can tell you, you know, in - a person in the US, in terms of energy, have 1800 kilowatts, that is, you know, to power air conditioners, your refrigerators, you iPod, everything you have. 1800 kilowatts.

I was in Nigeria recently, an average Nigerian has eight kilowatts. That's enough for an eight-watt light bulb. That's the average in Nigeria, and Nigeria is a big country. One eight-watt light bulb, compared with 1800 kilowatts here.

So without energy there is no development, and we are not - obviously, nuclear energy is not the only one, but working on development, giving everybody an equal opportunity to compete, to be part of the world, you know, would deal with a lot of the issues we are talking about.

You can't think today, you know, that a member of the European Union would use force against each other. And you ask yourself why. The why is because they have a decent standard of living, it's very costly to go to war, and they're very much interconnected. There's a lot for them to lose. They're becoming more conscious of the connectivity between them as human beings than between the French border and the German border.

What - if we really want to do something, it's whether we can expand as the European Union model, the 25 countries, or the US model, you know, the 50 states, you know, into a global model where people feel there is more affinity between them as human beings than affinity between them as states, with sovereignty, with flags, and et cetera.

So using money for development. Having - make sure that we have - we have the proper legal authority to do - to do the proper verification to make sure, absolutely, that there is no misuse of nuclear (inaudible).

And then, of course, have - have the independence, you know, the independence to do our job without the political interference of the government, which you have lots of, conflicting interests. I mean, I deal with that. We have 140 member states. I mean, each one with their own agenda, and many of them cancel each other, you know.

I think people need to understand that international organizations are there to serve their interests, you know, and we are a constellation of states, and states are people, you know. We need to make that connection, you know, that international organizations, at the end of the day, are a mechanism for the service of people, and it should be people-driven, and the focus on all of our activity should be to serve the individual.

DR. ELBARADEI: I think what justifies the treatment of Iran is that, as we mentioned, they have been running their program underground for many years, and that the Agency is not yet in a position to know for sure, you know, that everything has been declared to us, and therefore we still have this lack of clarity about the program, you know, and hence the distinction between Iran's developing enrichment program right now and Brazil's developing program right now.

However, as, again, I mentioned before, the Iranian experience has made it clear to us that you just cannot continue to have every country sitting on an enrichment factory. If we really want to protect ourselves, if we need to expand the margin of security, we need to multi-nationalize, internationalize the factories that produce the enrichment or separate the plutonium.

So every country will get what they need for their civilian program, without necessarily having at their fingertips the materials that they can use for nuclear weapons. Should the security situation change, you know, any time - and we know security perceptions change overnight sometimes, so we need to expand the margin of security.

We need to make sure that every country has what they need for a bona fide use for nuclear power, but not necessarily in the backyard the technologies that they can convert in a very short span of time into weapons.

DR. ELBARADEI: Go ahead.

DR. ELBARADEI: Sure.

DR. ELBARADEI: Sure.

DR. ELBARADEI: And that's happening today. I can tell you that, in fact, today I'm getting a letter from the major suppliers offering to start helping us establish a fuel bank. And the bank - a reserve bank manned by the IAEA - a bank of last resort. So that's part of the course of the multi-national approach, that you need to have a reserve bank.

So we are moving, but unfortunately, again, in many of our - in many of our situations we work by the shock treatment. You know, we only started to strengthen verification after our experience in Iraq in the 1990s. We started to work on nuclear safety after the Chernobyl accident. And now we are starting to work on the assurance of supply after 30 years of Kabuki dance, you know, but that's basically as a result of the Iranian experience.

So sometimes when I say that it's much more efficient to take preventive actions, people are skeptical, but you mentioned Iraq, for example. I mean, before the war - I mean, when we said Iraq did not have nuclear weapons, you know, we were running, you know, an inspection operation in Iraq for something, I think, like 20 million dollars a year, and after the war, as you know, the US had to spend three billion dollars to come to the same conclusion which we have reached before the war.

DR. ELBARADEI: Absolutely. I think, again, we should - this is another aspect of how to make ourselves more secure. There is no reason to use highly enriched uranium in the civilian fuel cycle.

And next month, I think many of you know that we're having a meeting in Norway. In fact, convened by the Norwegian government - to see how we convert all the reactors that are using HEU, and there are 90 some of them - into low enriched uranium.

But then again, I come to the issue, many of these research reactors are in weapons states, and the weapons states have also to agree to convert their reactors into low enriched uranium, and not just to tell everybody else you should do it but we will not do it.

It comes to a simple truth: What is good for the goose is good for the gander. If you try to reinvent that, you will not succeed.

DR. ELBARADEI: Well, I think what it should look like is easy. It should look like the Chemical Weapons Convention, like the Biological Weapons Conventions, which say total abolition of that weapon.

The Chemical Weapons Convention, they abolished chemical weapons, but a road map for getting rid of these weapons, you know, and time frame, and if we were to draft, re-draft a nuclear weapons convention, the NPT, that should have been the way to go.

DR. ELBARADEI: Well, two ways to answer. One is that we haven't seen any country that went the nuclear weapon route through nuclear power. You know, all those eight or nine countries that have developed nuclear weapons went through a research reactor, not a power reactor; either a conversion facility of an enrichment or reprocessing facility. So whether you ban nuclear power, you will not ban the capability of countries to develop nuclear weapons. So there is not that connection.

The other issue, nuclear power is just one part of the mix of energy. We will be very happy - I mean, nuclear power is clean. It doesn't release greenhouse gases, but of course it has the risk of a severe accident, as we have seen in Chernobyl. Clearly, now the reactors are much more modern, efficient, blah, blah, and that's when I come to India again. I'd like to see every reactor around the world is safe, technologically modern, to avoid any possibility of a nuclear accident.

But I would be very happy - I think we would be very happy to see modern technology. You know, wind, solar, as we know, these technologies today cannot provide basic - or generate electricity in large quantity, because it's still very expensive. We are working on fusion, as you know, which is, again, the future, supposedly, fusion of the atom instead of fission and that also is much safer and much more in abundance.

So nuclear, again, is - right now we have fossil fuels and nuclear. These are the two options we have for producing large amounts of electricity. Neither of them is perfect, but both of them are needed right now. Hopefully, in 50 years from now we'll have much better sources of energy.

Even in nuclear - as you know, there is - now there is a new program called GNEP in the Department of Energy which is trying to develop a completely new fuel cycle that is sage and secure, that's proliferation resistant, so with that technology we still have a lot ahead of us to develop a better technology.

I look at nuclear energy, fission right now is simply a phase. It's not going to be with us forever. I believe in the ingenuity of man. I believe that in 50 years from now we should have energy that is completely safe, secure, and does not have the risk of any of the energies we have, either the greenhouse gases or severe accidents, or what have you.

DR. ELBARADEI: I recuse myself. (Laughter).

Well, I think - I think I should put - I mean, the NPT does not, as we know, have a clear benchmark for moving towards nuclear disarmament. What it is saying is you should negotiate in good faith. But, as I mentioned before, after 30 years of having the NPT in force, is it justifiable that you still have 27,000 warheads? Is it justifiable that you still continue to work on modernizing, you know, your weapons arsenal?

But more important than just the legalities or the legal aspect of it is, wouldn't it be much more effective, and wouldn't you have much more moral authority to go after the Iranians of the world, you know, if you have really showed the way that you are moving out of the nuclear weapons?

I think that's actually what's missing in most of the cases. When you go to the Security Council and you get five nuclear weapons states telling Iran or Iraq not to develop nuclear weapons, the moral authority there is - is not absolutely pure. (Laughter).

DR. ELBARADEI: I think the citizen can do a lot, frankly, the citizen or the so-called civil society has shied away from engaging in security issues. Civil society, citizens have bee active in trade issues, in environmental issues, but for some reason they thought that security, nonproliferation, nuclear disarmament is - are too complex, that they should be left to government.

I think that's absolutely wrong, because if there is anything that threatens our survival, in fact, it is, you know, the nuclear weapons, the chemical weapons, biological weapons.

I remember I read, you know, recently, a quote by President Eisenhower, who was saying at the time, I think in the '50s, that he believed that people at one point would want to have peace so much that they will put all the governments aside and work for it.

And I think that's what you need, is just - government, as we know, you know, they need pressure groups, and they will only respond when they know that people are really interested in having a security system that provides them the guarantees that they will not wake up one day and find that an entire civilization has been swept away.

Because, as we know, we still live 15 years after the end of the Cold War, with nuclear weapons between the US and Russia, addressed at each other and that the President of each of these countries has half an hour to respond to a reported nuclear attack. Why do we have that?

I mean, I know Sam Nunn and others have been talking a lot about that, you know. Why 15 years after the end of the Cold War we still continue to have nuclear weapons on hair trigger alert.

There are still a lot of questions citizens can ask, and can really put pressure on government that we need to work in a fashion that is not business as usual. We must - what we need in most of these issues I've talked about is a change of mindset, and that I think change of mindset is not there yet.

DR. ELBARADEI: Well, of course, I fully agree with Sam Nunn that it's really a race against time, and we just don't have any time to lose, and we need to do much more than what we are doing, in fact.

There's a lost of nuclear material that's still not under - that requires physical protection, particularly in the former Soviet Union.

And there are a lot of sophisticated terrorists. We have seen that in 9-11. Not only sophisticated, but they are really interested in acquiring nuclear material or nuclear weapons.

So we need to do everything we can to make sure that they will never get their hands on nuclear weapons, nuclear material, that the material is adequately protected. That requires lots of work, you know, by everybody.

We were training, you know, countries on physical protection, i.e., we're training customs officials to make sure that we will detect any border crossing. We are doing what we call risk-based assessment to - for countries to understand what are the risks they are facing and be able to develop, you know, a security plan.

But I think, again, I yield to Sam who has said that we have done 50 percent of the work. We still have 50 percent of the work to be done. So we need - we ought to do as much and as fast as we can in the area of nuclear terrorism because, as I said, this is a threat, to me, as much more prominent than a new country acquiring nuclear weapons, because I had, a couple of years ago, a discussion with Prime Minister Ariel Sharon in Israel, and I told him, you know, with all that nuclear deterrence you have, if you have the terrorists, you know, acquiring nuclear weapons, none of your deterrence would work, because these people do not respond to any deterrents.

And it's not only in the Middle East - it's anywhere in the world. I mean, for them, if you have it, use it, you know, and that is an absolutely frightening prospect.

We need to work on the same principal. We need to work on controlling the material, but equally, again, I should end by saying we need to work on the causes. Why do we get these people into this fanatic mode to a point where they are ready to sacrifice their lives? They are born like you and me, or want to have a life, want to have hope, want to have a family, want to travel, and we need to create a condition so that these incentives for growing extremists are no longer there.

That's a lot of work for us, and that's why sometimes, when you say - lots of people say I'm talking out of the box. Well, I have no box, you know, because where I'm sitting, you know, I have to tell people, you know, that I will only succeed if you do all the support work that will help me to succeed.

And everything we do, you know, is very much connected, the linkage between social, economic, political security, are there to see, and we cannot just be blinkered and say, let us fight nuclear terrorism, by arresting people or putting them in prison - that's what maybe we have to do, but also you need to understand where are they coming from and try to address the causes.