UPDATE 2-Syria tenders fail, raising doubt over Assad ability to buy food
* Syrian state wheat and sugar tenders fail to attract offers
* Officials deny shortages, say they have 1 year wheat reserves
* U.N. says a fifth of Syrians lack food (Adds quotes, re-casts throughout)
By Maha El Dahan and Yara Bayoumy
ABU DHABI/BEIRUT, Sept 2 (Reuters) - Syria cancelled an urgent tender to buy sugar on Monday, two weeks after cancelling a bid to buy wheat, the latest signs that President Bashar al-Assad's government is losing its ability to buy food as civil war destroys its harvests.
In the failed transactions, Syria offered to pay for the food with funds held in frozen bank accounts abroad. The failures suggest those offers have been rejected by international traders, raising questions over how Assad's government can pay for food imports in the future.
The United Nations Food and Agriculture Organisation (FAO) said in July that a fifth of Syria's population was unable to produce or buy enough food, and farmers were short of the seed and fertilisers needed to plant the next crop.
In Monday's failed purchase, Syria's General Foreign Trade Organisation (GFTO) cancelled a bid to buy 276,000 tonnes of white sugar after receiving only one offer. The tender was a repeat of a smiliar one in July, which also failed.
The state wheat buyer, the General Establishment for Cereal Processing and Trade (Hoboob), cancelled a tender for 200,000 tonnes of soft milling wheat on Aug 20. At the time it said it had received two offers but they did not meet specifications.
Syria's civil war, now in its third year, has killed more than 100,000 people and driven millions from their homes.
The United States and some of its allies are now contemplating their first military intervention, to punish Assad's government for what Washington says was a chemical weapons attack on Damascus suburbs that killed more than 1,400 civilians on Aug 21. Syria denies blame for that incident.
Syria needs to import around 2 million tonnes of wheat this year as civil war has cut its crop to a near 30-year low at 1.5 million tonnes, less than half the pre-conflict average.
The government buys huge quantities of wheat to feed the population on subsidised bread. It has issued a series of tenders for sugar, wheat, flour and rice in recent weeks.
Syrian officials deny there is a supply problem. A Hoboob official told Reuters on Monday the state buyer would not try again to tender for wheat after its Aug. 20 failure.
"We are in no urgent need to tender because we have a good strategic stock, we have always maintained a 12-month stockpile," said the official, who declined to be identified.
He said Hoboob had purchased 820,000 tonnes of wheat from the domestic harvest in the current procurement season and still holds its normal pre-war reserve of 3 million tonnes.
State news agency SANA on Monday quoted Internal Trade and Consumer Protection Minister Samir Ezzat Qadi as saying wheat was "available and in large amounts at warehouses".
But the failed tenders suggest that the situation is worse than officials acknowledge.
Western trade sanctions imposed against Assad's government do not ban food imports, but they make it difficult to pay by imposing sanctions on Syrian banks. That has led to deals being arranged by brokers in the Middle East, while many international companies back off.
In recent weeks the government has offered to pay for food with funds held in frozen bank accounts abroad. But those deals would require the sellers to secure permission from European governments to unfreeze the funds. Traders appear to have shied away rather than accept responsibility for unfreezing the money. ID:nL6N0GN0G8]
Monday's failed sugar tender document stated that Syria was seeking the quantity, "due to extreme urgency".
The GFTO said it received only one offer and would announce a new tender soon. An official at the agency would not comment on the country's sugar reserves, but said the new tender would ask for the same quantity of sugar, not more.
A Lebanon-based Middle East wheat trader who regularly trades with Damascus said the real challenge was getting wheat to the mills to make flour.
"Due to electricity cuts, the lack of security and the difficulty of movement, this is the real problem," the trader said. (Additional reporting by Sybille de la Hamaide and Valerie Parent in Paris, and Michael Hogan in Hamburg; Editing by Veronica Brown and Peter Graff)