MANILA, July 30 (Reuters) – U.S. Defense Secretary Lloyd Austin is working to shore up American relations with the Philippines that have stagnated in part over the precarious state of an agreement governing the presence of U.S. troops in the country as he wraps up a two-day visit on Friday.

The Pentagon chief on Thursday met with President Rodrigo Duterte, who told the United States last year he was cancelling the Visiting Forces Agreement (VFA) that the two countries signed in 1998. Austin is set to meet Philippines defence chief Delfin Lorenzana on Friday to discuss the future of the pact.

The VFA provides rules for the rotation of thousands of U.S. troops in and out of the Philippines for war drills and exercises. It has assumed additional importance as the United States and its allies contend with China’s assertiveness in the region.

Ties between the United States and its former colony have been complicated by Duterte’s rise to power in 2016 and his frequent condemnation of American foreign policy and embrace of China, a country that nevertheless has continued to pressure Philippine maritime boundaries.

The Philippines is a U.S. treaty ally, and several military agreements are dependent on the VFA. Duterte vowed to terminate the pact after the United States denied a visa to a Philippine senator who is an ally of the president, but has repeatedly suspended the expiration date, the latest time last month. The current expiration date set by Duterte is the end of the year.

“The alliance is treading water because of the VFA abrogation threat at a time when it desperately needs to be moving forward,” said Greg Poling, a Southeast Asia analyst from the Washington-based Center for Strategic and International Studies think tank.

“China’s been eating both of our lunches for five years. … You can’t plan an alliance in six-month intervals,” Poling added.

Duterte said on Monday his country will fight for “what is rightfully ours” and not allow itself to be bullied by any superpower.

For the United States, having the ability to rotate in troops is important not only for the defence of the Philippines, but strategically when it comes to countering China’s increasingly assertive behaviour in the region.

There are continued tensions between the Philippines and China over disputed waters in the South China Sea and the United States sending the Philippines millions of doses COVID-19 vaccines to help combat the pandemic.

The United States this month repeated a warning to China that an attack on Philippine armed forces in the South China Sea would trigger a 1951 U.S.-Philippines mutual defence treaty.

The situation is complicated by Philippine presidential elections set for 2022. While Duterte is barred by the nation’s constitution from seeking re-election, his party has been encouraging him to run again for office, as vice president.

Abraham Denmark, a former U.S. deputy assistant secretary of defense for East Asia, said Austin has an opportunity to show that the alliance remains in the interest of the United States and the Philippines.

“I don’t think either side is all that interested in the United States becoming a political issue in their domestic politics,” Denmark said.

Lorenzana said last week that a side agreement to implement the VFA extension was with Duterte’s office and that he would discuss the pact and the mutual defense treaty with Austin.

Reporting by Idrees Ali and Karen Lema; Editing by Will Dunham

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