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SINGAPORE—The U.S. and Philippines are holding one of their largest-ever military exercises involving thousands of troops on both sides, a sign that their security alliance is on firmer footing following years of turbulence that threatened to unravel a key U.S. relationship in the Indo-Pacific region.

The shift has been under way for the past year as Philippine President Rodrigo Duterte approaches the end of his six-year term. During much of his tenure, Mr. Duterte bristled at Washington’s admonishments of his human-rights record and drew his country closer to China. The U.S. alliance appeared particularly vulnerable when Manila in 2020 moved to scrap a military pact that facilitates visits to the Philippines by U.S. troops, ships and aircraft.

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