By Amy Sawitta Lefevre
NAKHON NAYOK, Thailand (Reuters) - The United States said on Monday its relationship with longtime ally Thailand was going through a "challenging" period as the two sides began a major military exercise, scaled down over Washington's concerns about the junta leadership.
Cobra Gold, the largest military exercise in the Asia-Pacific, has been held annually in Thailand for more than three decades, but the United States scaled the drill back this year after sanctioning Bangkok for last year's coup.
"We can't deny that this period is a challenging one and has necessitated a modified Cobra Gold as Thailand manages its return to democracy," U.S. charge d'affaires Patrick Murphy told the Cobra Gold opening ceremony at a military academy in Nakhon Nayok, east of Bangkok.
The Thai army took control last May saying it needed to restore order after months of political unrest that killed nearly 30 people. The United States responded by freezing $4.7 million of security-related aid and cancelling some security cooperation.
Comments by a visiting U.S. envoy last month, including that Thailand immediately lift martial law which has been in place since May, further strained ties. Senior Thai ministers responded by telling the U.S. not to meddle in Thailand's political affairs.
Last week Prime Minister Prayuth Chan-ocha, a former army chief, said a general election would take place in 2016 but stopped short of giving a specific date. His military government has said martial law will remain in place indefinitely.
Washington has sent 3,600 troops for this year's exercise, down from 4,300 last year, the U.S. Embassy in Bangkok said in an e-mailed statement.
"Cobra Gold is a symbol of long-standing and continuous military cooperation," said General Wuttinun Leelayudth, Thailand's deputy Supreme Commander, told attendees. "The training shows transparency in terms of these relationships."
The exercise comes as Thailand seeks to counterbalance its ties with Washington by cozying up to regional superpower China which says it supports the Thai military government.
Ian Storey, senior fellow at the Institute of Southeast Asian Studies in Singapore specializing in Asian security issues, said that cancelling the exercise could have had major security implications in the region.
"Cancelling them would have created an opportunity for Beijing to strengthen its strategic ties to Bangkok, and that is clearly something that is not in Washington's interests in the context of U.S.- China competition in Southeast Asia," he said.
More than 10,000 troops from 24 countries are taking part in the multinational exercise including Japan, South Korea and Indonesia. China and India will participate in humanitarian exercises, said Wuttinun.
(Editing by Jeremy Laurence)