Syria, France in wheat row

Syrian authorities have rejected a French wheat shipment they said had failed to pass quality controls, drawing the intervention of President Nicolas Sarkozy.

France has led a European rapprochement with Damascus that has helped ease the economic and political isolation of Syria, which remains under US sanctions.

A letter from Sarkozy to President Bashar Al-Assad, a copy of which was seen by Reuters, said the shipment conformed to international standards.

It urged the Syrian leader to find "a quick and positive solution to the dispute, which could affect the promising future" of French-Syrian commercial ties.

A Syrian commodities official confirmed that the Panama flagged vessel DD Vogue, carrying 21,544 tonnes of French soft wheat was prevented from unloading at Tartous port after failing Agriculture Ministry tests.

"It was a purely technical decision by the ministry," the official told Reuters.

The shipment was the last of a 150,000 tonne purchase signed in April between the state's grains division and Granit Negoce, the marketing division of French cooperative Epis-Centre.

Jean-Philippe Everling, director of Granit Negoce in Paris confirmed the cargo had been rejected but declined to comment further.

French port data showed the vessel had left France on June 4. Syrian trading sources said it arrived four days later and has been at anchor off Tartous since then. The deal was priced at 180 euros a tonne, a market source said.

The supplier said that the cargo was well within quality specifications, after Syrian inspectors tested it twice -- at the loading port of Nantes and upon arrival at Tartous -- the market source said.

An international trader said the dispute would further discourage major global suppliers, already wary of dealing with a labyrinth of state bureaucracies on wheat imports, from participating in Syria's wheat tenders.

"A solution will not be easy, but it will likely involve measures to save face for the government and a cost to the French company," the trader said.

Syria has sought to rebuild its strategic reserves of wheat after mismanagement of the water supply and droughts lowered domestic production, which was expected at 3.2 million tonnes this year, versus a planned 4.7 million tonnes.

It began issuing tenders to import wheat in July 2008 for the first time in 15 years, after production plummeted and it was no longer self sufficient in the crop.

The government contracted to import around 1.2 million tonnes of mostly East European wheat since July 2008, but only 300,000-400,000 tonnes have been received.

The official said most of the imports were due to be delivered between July and September this year and any delay was operational, but he acknowledged that unspecified volumes will be cancelled.

Wheat is a sensitive issue in Syria where an agricultural policy based on subsidies also relies on commercial imports and a 500,000 tonne wheat grant from the UAE.