The conferral in October of the Nobel Peace Prize on the International Atomic Energy Agency (IAEA) and its current director general, Mohamed ElBaradei, is noteworthy on several scores. Most obviously—and this is about all the general press has noticed—it's a boost for the somewhat embattled director. Much more important, however, it represents a vote of confidence in the controversial agency that has the sometimes thankless job of verifying the compliance of non-nuclear-weapons nations with treaty obligations.

Perhaps, too, the award also quietly affirms the desirability of nuclear energy as such. The Norwegian Nobel Committee commended the IAEA and its head, as the opening paragraph of its citation put it, "for their efforts...to ensure that nuclear energy for peaceful purposes is used in the safest possible way"—interesting language, coming from an organization closely linked to a community of peace activists who have always been profoundly suspicious of the atom.

Founded in 1957 to safeguard bilateral sales of nuclear equipment and know-how, the IAEA was tainted from its inception by its association with nuclear commerce and the whole idea of "atoms for peace"—that is, the uncritical promotion of nuclear energy. When the Nuclear Non-Proliferation Treaty (NPT) took force in 1970, the agency's mandate was immensely broadened to monitor compliance with the treaty, but some wondered whether an outfit with such a schizoid mission could possibly succeed.

The treaty guaranteed non-nuclear-weapons states the "inalienable right" to acquire peaceful nuclear technology, notes physicist Wolfgang Panofsky, a former director of the Stanford Linear Accelerator Center. Requiring nuclear-weapons states to make good-faith efforts toward nuclear disarmament in exchange for other states' forgoing acquisition of nuclear weapons, the treaty was what Panofsky calls "an uneasy bargain." And the IAEA had the uneasy job, often working with very fragmentary information, of verifying that non-nuclear countries were staying non-nuclear.

The first signs were not auspicious. In the 1970s, some countries made comprehensive sales of nuclear equipment to dubious customers, including fuel-handling technology that could not be readily safeguarded. Meanwhile, in 1974, India tested what it claimed was a "peaceful nuclear device," frontally challenging both the legitimacy and the practical workability of the non-proliferation regime being erected. If the reader will indulge a personal observation, I happened to arrive at the IAEA's headquarters in Vienna a month after the Indian test, sent for a summer internship by a public policy program at Princeton University. Two other graduate interns were from Johns Hopkins University's School of Advanced International Studies.

The three of us expected to find an agency on high alert, abuzz with serious thought about how to address the Indian challenge. Instead, what we found, from top to bottom, was this attitude: India is not party to the NPT; dealing with India is not part of our job description; end of story. Disappointed, within a month, all three of us had bailed out and left Vienna.

Lack of confidence in IAEA safeguards got a vivid demonstration on 7 June 1981, when Israeli fighter-bombers destroyed a large Iraqi research reactor that Saddam Hussein had bought from France. A pattern of highly suspicious nuclear transactions, plus some temporizing on the part of Saddam about inspections, evidently persuaded Israel's leaders that Iraq might manage to build and use a nuclear weapon before the IAEA could provide timely warning and the world could react.

This, of course, was not the way the safeguards system was supposed to work, and the IAEA's leaders were naturally irate. What right did a nonparty to the NPT—and one well known to be amassing a secret nuclear arsenal of its own—have to, in effect, enforce NPT requirements? The United States joined in a U.N. censure of Israel's action, but its ambassador to the United Nations said it was "not unreasonable to raise serious doubts about the efficacy of the Non-Proliferation Treaty safeguards system."

The IAEA's reactions to the Israeli raid may partly explain and forgive why the agency may have gotten a little careless with its language toward the end of the 1980s, when Saddam began to reassemble a nuclear weapons program. When the agency should have just said, and probably meant to say, that it could find no evidence of wrongdoing, it sometimes seemed to verge on saying there was no wrongdoing.

Still, after the first Gulf War, agency experts played an enormous role in the investigations that proved Saddam had an advanced and sophisticated nuclear weapons effort. As a result of the disclosures, the agency sought and obtained agreement by its members to greatly increase its latitude in inspections and to give it the mission of actually preventing nuclear proliferation to the best of its ability. This was the beginning of a new, very different IAEA.

Two years ago, when reports of classified IAEA documents detailing NPT violations by Iran began to appear in some major newspapers, I sent the press office at the IAEA a message: given that some favored journalists obviously were getting access to classified material, I suggested, why not declassify the reports and post them on the IAEA Web site, so the rest of us journalists could read them? Soon, reports were declassified and posted, and I knew something important had changed.

Much ink has been spilled over the question of whether, during the last two years, the IAEA has taken a tough enough line on Iran. What's often lost sight of in that debate is the simple fact that the whole case against Iran rests on evidence assembled by the IAEA revealing a 20-year pattern of clandestine treaty violations. Last year, a senior safeguards official told me on the record that the scope and seriousness of Iran's misconduct was unprecedented in the agency's experience.

This year, coincidentally, the world lost some of the leaders who did the most to articulate a vision of a world in which the peaceful application of nuclear energy could be reconciled with the control and elimination of nuclear weaponry. One was Hans Bethe (1906­2005), the German-born scientist who, as a young man, deciphered the nuclear processes of the sun, helped bring the new nuclear physics to the United States, and served as head of the theory division in the Manhattan Project. "It was his conviction that nuclear energy and arms control must be reconciled, not merely that they can be," comments Panofsky—"and that is my conviction, too," he adds.

Another great loss was the physicist Jozef Rotblat (1908­2005), generally believed to be the only member of the Manhattan Project to resign after Germany was defeated and the specter of a Nazi nuclear weapon was gone. In the 1950s, with Albert Einstein and Bertrand Russell, Rotblat founded the Pugwash nuclear disarmament movement.

Perhaps it is not too much, as that generation of disarmament-minded physicists fades, to think of the IAEA's peace prize as an effort to institutionalize a movement that used to depend on the leadership of very exceptional individuals. If so, the Nobel committee may be hoping for a little too much. For the agency is still saddled with an immensely difficult job, Panofsky reminds us, that will be doable only if all the signatories keep their NPT commitments and enforce obligations in a fair-minded and nondiscriminatory way.