Counterfeiting being used against Iraq U.S. leads effort, officials allege


AMMAN, Jordan -- Iraq's economy is the target of a U.S.-led destabilization campaign to pour vast amounts of counterfeit currency into the country, Arab and Western officials here say.

The fake dinar notes are being smuggled across the Jordanian, Saudi, Turkish and Iranian borders in an effort to undermine the Iraqi economy, said the officials here who closely monitor the situation inside Iraq.

Those officials said counterfeit dollars were being smuggled into Iraq in smaller quantities to confound the banking system further. The officials, who insisted on not being identified, said the countries behind the separate counterfeiting operations included Western nations, Saudi Arabia, Iran and Israel.

The fake currency is openly discussed in the news media and by the people in Iraq. The counterfeiting problem has become serious enough to be loudly denounced by the government, which is taking measures to curb it, including instituting life sentences for cooperating in circulating counterfeit dollars or dinars and death sentences for those who smuggle them into the country.

The fake currency has contributed to Iraq's severe inflation problem, which is aggravated by the fact that the Iraqi government is printing money at uncontrolled speed to pay inflated salaries and cover the costs of reconstruction.

Over the last few months, the destabilization efforts seem to have shifted into high gear, officials here say, particularly after the United States was reported in February to have authorized full-fledged covert operations against Iraq.

(In Washington, Mark Mansfield, a spokesman for the CIA, declined "as a matter of policy" to discuss the dumping of fake currency in Iraq.)

Along with international economic sanctions against Iraq, those measures have had mixed results since the Persian Gulf war ended in February 1991. They have clearly helped weaken the economy to the point where the local currency could become worthless, and they have loosened President Saddam Hussein's grip on the people and forced his government to respond with an intensified reconstruction program to curtail shortages and restore basic services.

On the other hand, the measures buttressed the assertion, shared by a rising number of Iraqi nationalists including Sunni Muslims and Christians, that the West and its allies will not be content with the removal of Mr. Hussein, but only with partitioning and destroying the country.

Further weakening the economy is the fact that legitimate Iraqi currency is not backed by any gold or hard currency because those are being used to import goods.

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