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ARE FAKE BILLS AN ATTEMPT TO DESTABILIZE ECONOMY?

SHARE ARE FAKE BILLS AN ATTEMPT TO DESTABILIZE ECONOMY?

A flood of high-quality $100 bills counterfeited in the Middle East is so widespread it has caused some foreign banks to lose confidence in the bills and may be part of an attempt to destabilize the U.S. economy, the New Yorker reports.

The counterfeiters are believed to be operating in Syria or Lebanon, the magazine reported.Reports of such a counterfeiting ring first emerged in 1992 from a House Republican task force. But that report said the operation was based in Iran, not Syria.

Treasury officials have played down the reports because of fears they could shake confidence in American currency, widely used around the globe, the New Yorker reported in its Oct. 23 edition, on sale Monday.

Last month, when Treasury Secretary Robert Rubin introduced the first redesign of American currency in 65 years, he said it was prompted by future counterfeiting threats, not a current problem.

But counterfeit $100 bills have become so widespread in Russia that German banks will no longer accept them from Russians, a top Russian Central Bank official told State Department officials on Sept. 13, the magazine said.

Last February, the Hong Kong Standard newspaper also reported a rash of counterfeit $100 bills there. And scattered reports of problems have popped up in Ireland, England and Greece.

The State Department believes Syria's military is protecting the ring, the magazine said. Officials sought a diplomatic solution in a May 1994 meeting between Secretary of State Warren Christopher and Syria's president but were stymied because they do not know the counterfeiters' exact location.

The bills, printed on paper startlingly like that used by the Treasury, are so good they could fool currency scanners at Federal Reserve banks, said Boston federal prosecutor Paul Kelly, who was involved in an investigation by Secret Service agents.