For instance, the IAEA-Iran safeguards agreement's "exclusive purpose" is to verify that nuclear material "is not diverted to nuclear weapons or other nuclear explosive devices." Nothing else is covered. It does not cover computations possibly relevant to nuclear weaponry, nor does it pertain to conventional weapons testing, even if such research may be relevant to nuclear weaponry. This may be why Iran feels fully justified in denying the IAEA access to its Parchin military base, about which allegations of conventional explosives work in the 1990s, possibly related to future nuclear weaponization plans, have been made. As the former U.K. ambassador to the IAEA, Peter Jenkins sums up, "it's questionable whether all the activities for which Iranian cooperation has been sought imply with adequate credibility the possibility of undeclared nuclear material."
The limited legal authority of the IAEA to carry out inspections is definitely a flaw -- from the perspective of the IAEA, at least -- but such restrictions on the IAEA were purposefully introduced to preserve a measure of national sovereignty. Even if a state has no illicit nuclear work to hide it may not be comfortable with inspectors traipsing all over the country inspecting all and sundry. This restriction on the IAEA's legal purview is similar to the limits placed upon the police. The police have a mandate to stop crime, but they do not have the legal authority to inspect your bedroom at 3am. As a society we have delimited the police's legal authority in many ways. The same was done with the IAEA. Pierre Goldschmidt, the former deputy director of safeguards at the IAEA, summed it up well: "The [IAEA] Department of Safeguards doesn't have the legal authority it needs to fulfill its mandate and to provide the assurances the international community is expecting."
In order to partly redress this shortcoming, the "Additional Protocol" was introduced: this voluntary measure allows the IAEA to conduct more intrusive inspections than are normally permitted. But the operative word here is "voluntary": if nations do not want to subject themselves to enhanced IAEA inspections -- such as Iran, Brazil, Argentina, and many others -- they need not do so. As the IAEA itself states, without an Additional Protocol in place, "absent some nexus to nuclear material the Agency's legal authority to pursue the verification of possible nuclear weapons related activity is limited."
Besides proposing the optional Additional Protocol to try to tamp down on illicit activity, the agency has also become increasingly reliant on intelligence information provided by third-parties to ferret out clandestine nuclear activity in certain signatory states. Unfortunately, this provision can and has been misused by third parties repeatedly, and also opens up the IAEA to accusations of politicization. There is also an obvious danger that the intelligence flow may become two-way, with the IAEA providing information to some member states' intelligence services. This has been a problem in the past: in pre-war Iraq, members of the U.N. weapons inspection agency, UNSCOM, often provided information back to their intelligence services. David Kay, the agency's chief weapons inspector, later admitted: "Well, I think it was a Faustian bargain. The intelligence communities of the world had the only expertise that you could use if you were unmasking a clandestine program.... I realize it was always a bargain with the Devil -- spies spying. The longer it continued, the more the intelligence agencies would...decide that they had to use the access they got through cooperation with UNSCOM to carry out their missions."