UPDATE 1-Syria cancels tender to buy rice as traders steer clear
* Rice sought due to "extreme urgency"
* Payment promised through frozen funds abroad
* Government struggling to purchase sugar, wheat, rice (Adds details, background)
By Maha El Dahan
ABU DHABI, Sept 4 (Reuters) - A Syrian purchasing agency has cancelled an urgent tender to buy 135,000 tonnes of white rice, the third state food tender to fail in two weeks as a new payment system to avoid problems from financing sanctions failed to attract traders.
The General Foreign Trade Organisation (GFTO) sought the rice in a tender that closed on Aug. 25.
A source at GFTO, who declined to be named, would not comment on the number of offers received but said another tender for the same quantity would be issued next week.
The tender document, issued on July 28, cited "extreme urgency". It stated that payment could be made from Syrian bank accounts abroad that have been frozen by Western sanctions.
The European Union, United States and other Western countries have imposed sanctions on President Bashar al-Assad's government over his crackdown on the revolt in the country.
The sanctions do not target food shipments, but a financing freeze has hindered Syria's ability to import food supplies, including grain and sugar.
In recent weeks the government has offered to pay for food with funds held in frozen bank accounts abroad. But those deals would require 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.
The GFTO on Tuesday announced a tender for 276,000 tonnes of white sugar after two previous attempts to buy that same amount failed. It also cited payment through using frozen funds.
Only one offer was received in the previous GFTO sugar tender, which was cancelled on Monday.
Another state purchasing agency, the General Establishment for Cereal Processing and Trade, said on Aug. 20 it had failed to buy wheat in a tender seeking up to 200,000 tonnes. It had offered to pay with frozen funds but received only two offers, which did not match specifications. (Reporting by Maha El Dahan; Editing by Anthony Barker and Jane Baird)
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