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Sheikh Abdullah Bin Zayed Al Nahyan UAE's Minister of Foreign Affairs, right, has coffee while meeting with Canada's Foreign Minister John Baird at the Tim Hortons at Abu Dhabi Mall in Abu Dhabi on April 2, 2013.Christopher Pike

Canada is hitting the reset button on relations with the United Arab Emirates, sealing a deal to remove a costly visa requirement for Canadians and increasing ties with an influential ally that Ottawa views as a potential partner in Mideast diplomacy.

The new chapter in the UAE relationship marks a move to bigger business as Canada angles for some of the Gulf nation's untold billions in investments and trade. Foreign Affairs Minister John Baird's visit here, fresh off an effort at diplomatic reconnection in Iraq, is aimed at deepening business and diplomatic ties.

In declaring the end to a "challenging period" in Canada-UAE relations, Mr. Baird took some credit by pointing to his relationship with Sheik Abdullah bin Zayed Al Nahyan, the UAE's Foreign Minister and a royal prince of Abu Dhabi, whom he counts as one of his two or three closest friends among foreign ministers. "I think our personal relationship was a big part of it," he said of the visa deal.

The spat, a three-year-old dispute in which Canadian troops were kicked out of the base they used to stage operations in Afghanistan, had been partly Mr. Baird's own fault.

As transport minister in 2010, he played a key role in a decision to refuse new routes to the UAE's major airlines that prompted the base closing and the imposition of punitive visas fees for Canadian travellers.

On Tuesday, as Mr. Baird visited Abu Dhabi, the UAE indicated it will drop the costly travel visas it had imposed and gave the minister a royal show of warmth, including the photo op he coveted: a shared cup of coffee at a Tim Hortons with Sheik Abdullah.

Members of the royal family don't typically do coffee-shop photo ops. But Mr. Baird has cultivated a personal relationship with Sheik Adbullah. After the two ministers signed a coffee pot, Mr. Baird, double-double in hand, served Sheik Abdullah a coffee before a long chat.

And to the delight of Mr. Baird's aides, Sheik Abdullah sealed the show by inviting the Canadian minister into his silver Mini Cooper and driving him to a helipad, where the two took off for Dubai for a meeting with the UAE's Prime Minister, Sheik Mohammed bin Rashid Al Maktoum, at his Zabeel Palace.

A joint statement issued later indicated that the UAE will drop the punitive visa penalties – $1,000 for a six-month visa and $250 for a 30-day visa – a measure to be finalized in a month. The two countries will also establish a joint business council. It was another example of the warmer ties Sheik Abdullah signalled on a visit to Ottawa last year when Canada signed a nuclear co-operation deal with the UAE, although a Canadian source insisted no new concessions were offered to seal the visa-fee change.

But Mr. Baird's visit here is also aimed at cementing business and trade ties. The success of Tim Hortons – its franchisee has opened 28 stores since 2011 in the UAE, its first international market outside North America – is itself a symbol of the potential.

Oil has given the UAE vast wealth, but the small Gulf country is aggressively trying to diversify its economy, court connections to the West, and make the Emirates a showcase of the Middle East – Dubai's Burj al-Khalifa tower, the tallest building in the world, is only one of the audacious symbols in a construction-mad country. Abu Dhabi will soon house the only branches of the Louvre and New York's Guggenheim museum in an entirely new cultural district.

The UAE has built airlines and financial services, and imported teachers, health-care workers and other professionals – including 40,000 Canadians – to a nation where less than one million Emiratis are a minority among nine million residents. And it has money to invest – the Abu Dhabi Investment Fund alone has $600-billion, and there are dozens of other large funds and firms. In 2011, the UAE was Canada's fourth-largest foreign investor, putting $30-billion into Canadian assets.

One of Mr. Baird's stops was to visit powerful Abu Dhabi bureaucrat-businessman Khaldoon al-Mubarak, CEO of the $50-billion Mubadala fund, mandated to transform Abu Dhabi into a knowledge economy. Mr. al-Mubarak sits on the boards of banks and businesses and as chairman of the newly rich Manchester City soccer club.

Mr. Baird, however, insisted that Canadian interests in ties to the UAE are also in having an influential ally in regional issues in the Middle East.

"It's not all business here," he said. "With the Arab Spring, with the challenge of Iran, the challenge in Syria, the UAE is a like-minded ally. Not on everything, but on a lot of things."

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