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Christopher Hill, the U.S. envoy on North Korea, speaks this morning in Beijing about upcoming nuclear talks.

For those with a conspiratorial bent, try this on for size:

The Bush administration alleges that North Korea’s criminal ventures include a devious scheme to counterfeit U.S. $100 bills of impeccable quality, passing them off around the globe. But the charge is a red herring.

It’s actually the CIA that prints the notes. It funds its own covert operations this way, then lays the blame at Pyongyang’s feet.

This is the gist of a piece that appeared Jan. 8 in the Frankfurter Allgemeine Sonntagszeitung. You can see the translation here. It is making the rounds of conventional media in Europe, and gaining traction among those inclined to think the worst of the CIA.

Whether you agree or find it far-fetched, as I tend to do, it’s worth examining the points, if for no other reason than that the ongoing nuclear talks over North Korea were almost derailed by the U.S. Treasury charges of counterfeiting, and the subsequent sanctions imposed on Pyongyang. This gets a little technical, so brace yourself.

The article says the difficulty of producing such high-quality fakes is mind-bogglingly high. First off, there’s the polyester security film and the graduated watermarks on the fake bills. Secondly, North Korea would’ve had to acquire a special Intaglio printing press from a company in Wuerzburg, Germany, that is under scrutiny by Interpol. Thirdly, North Korea would’ve had to have gotten its hands on expensive OVI color-changing inks that change from bronze-green to black depending on the incidence of light. The article also makes vague allegations that Interpol, the global police agency, doesn’t fully believe the U.S. charges.

The last argument is interesting: North Korea is only known to have passed off about $50 million of the bogus notes in the past 17 years. (Michael Merritt, deputy assistant director of investigations for the Secret Service, offered the figure in congressional testimony in April.) Why so little? Obtaining the press, the technology, the special cotton used in the paper, the inks, could easily have cost  $50 million just to mount the operation.

Those are the arguments. Here are some counter-arguments. The idea that German and Swiss companies would not be craven enough to sell a printing press and specialized inks to North Korea does not hold water. Why wouldn’t they? Also, why would North Korea have hollered so mightily about U.S. sanctions on a lone Macau bank, Banco Delta Asia, holding only $24 million or so in it of frozen funds, unless that bank served as a major conduit for illicit money, including bogus bills? And what about the North Korean economic attaché in Moscow who defected, then spilled the beans on the counterfeiting operation? And the other North Koreans caught red-handed with bogus bills?

There remains this lingering question for me: Supposing Pyongyang is pumping out the bogus stuff, why hasn’t it passed off more than $50 million? Why not $150 million? Or $300 million? 

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