Apr.17, 2010, Source: Los Angeles Times

NASIRIYAH, Iraq: At least $US4 million ($4.3 million) in counterfeit American currency has flooded into Iraq since December.

US military officials are unsure how much of the counterfeiting is simply criminal and how much might have been an Iranian attempt to influence Iraqi elections last month.

While some of the bills are crudely made and easily detected, US military officials say much of the money seized so far has been sophisticated $100 notes that require special printing presses, ink and paper.

In the Middle East, such capabilities typically belong to Iran and its proxies, notably the Lebanese Shiite militant group Hezbollah, the officials said, citing briefings from the US Secret Service.

''It runs the gamut of the local stuff on the HP printer - not the right paper, but kind of looks like it - all the way up to the very well-made versions that we see, the ones coming in from Lebanon,'' said Colonel Peter Newell, the commander of the 4th Brigade of the 1st Armoured Division, which operates in Maysan and two other southern provinces near the border with Iran.

In recent weeks, Iraqi and US forces have launched an anti-counterfeiting push to educate merchants and bankers and gather intelligence on whether the money was linked to Iran's bid to influence Iraq's March 7 parliamentary elections and to launder money for militia activity in Iraq's southern Shiite heartland.

Before the push, vendors bought and sold the fake money openly on Iraqi streets at 5 cents on the dollar for the homemade kind and 20 cents on the dollar for the more sophisticated notes. The notes were so pervasive that they even turned up on US military bases via Iraqi subcontractors.

Iraqi and US agents have seized about $US500,000 of the fake $100 notes, nearly all of it in Maysan and other provinces near the Iranian border.

In the port city of Umm Qasr, bank workers discovered more than $US100,000 in fake US currency among its deposits last month and turned it over to authorities. A few months before that, police in Karbala busted a female gang that was passing fake notes at jewellery, gift and clothing stores in a money-laundering attempt.

But the sudden influx of counterfeit notes three months before the elections suggested Iran had been trying to influence the outcome, officers said.

''[The election] is certainly one of the purposes of a mass quantity of cash all of a sudden,'' Colonel Newell said.

''It can pay for lethal aid. It can pay for elections. It can pay for commodities. It can be laundered into a lot of things, and what better time to launder significant amounts of money than during an election period, when lots of money is being moved?''