Philippine President Gloria Macapagal-Arroyo said on Saturday that the U.S. military's decision to cancel one of its annual exercises with the Philippine troops is a "setback" for the alliance between the two countries.

"The cancellation of these exercises is a setback to our military modernization program, the interoperability of Philippine and U.S. forces and the strategic alliance of both countries," a report by ANC TV quoted Presidential Spokesman Ignacio Bunye as saying on behalf of Arroyo.

Bunye said that Arroyo understood and respected the U.S. decision, adding "we hope that the exercises can be put back on track as soon as possible".

The U.S. military on Friday announced that the annual joint military exercise "Balikatan (Joined-Arms)" with Filipino troops has been canceled due to the continued detention of U.S. Marine's Lance Corporal Daniel Smith under Philippine authorities following his conviction on Dec. 4 for raping a Filipino woman.

The U.S. embassy to Manila confirmed the military announcement on Friday, saying that under the Visiting Forces Agreement (VFA) between the two countries, Smith should remain in the embassy's custody until all appeals in his case have been exhausted.

Bunye said that the Arroyo administration had endorsed calls according to the VFA for Smith to be turned over to the U.S. embassy.

Source: Xinhua