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Canadian Foreign Minister John Baird addresses the United Nations Generally Assembly at UN Headquarters, in New York, Nov. 29, 2012.CHIP EAST/Reuters

Ottawa has backed away from warnings of reprisals against the Palestinian Authority for its move to obtain "observer-state" status at the United Nations, signalling it has no immediate plans to slash aid or take other punitive steps.

Instead, after a 90-minute meeting with four temporarily recalled Canadian envoys to the United Nations and the Middle East, Foreign Affairs Minister John Baird said Ottawa will keep an eye on what the Palestinians do next, and support a return to peace talks.

It's a change from the threats of "next steps" that the government issued before the UN vote, which dangled the prospect that Ottawa might cut its five-year, $300-million aid package to the Palestinian Authority. But after the Palestinians won the UN vote by a landslide margin, Ottawa was left out on a limb as none of its allies, including the United States, planned reprisals – except for Israel, which drew sharp international condemnation for a highly controversial plan for new settlements in a politically sensitive area of the West Bank.

Now, the Harper government is shifting its warnings back toward the same line drawn in Washington, noting that it is watching to see whether the Palestinian Authority seeks membership in other UN agencies, notably the International Criminal Court, a body that Israel fears could be used to mount a campaign of war-crimes suits.

In the meantime, however, Ottawa is turning the tone away from retaliation.

Last Thursday, Mr. Baird said Ottawa would consider "all available next steps."

But by Friday, the government was already starting to soften its position. On Tuesday, after meeting with the four diplomats recalled after the UN vote, Mr. Baird's spokesman signalled no plans for reprisals and described the Palestinian aid as "important."

It will go through a routine review when its five-year period runs out, like all other aid, but will not be slashed, the government said.

"Our $300-million over five years in support of security and humanitarian aid is important," Mr. Baird's press secretary, Rick Roth, said in an e-mail after the meeting. "We intend to, by and large, see these projects through. The relevant minister will, as a matter of course, as he does on all matters, review the path forward once the projects have been successfully completed."

Despite all the tough talk prior to the vote, it was clear that Mr. Baird does not want to fuel tensions with reprisals now.

The Palestinian Authority won the vote by a 138-9 margin, when Canadian allies such as Britain and Australia abstained. The Palestinians showed ire at the Canadian campaign, warning they would try to isolate Canada from any role in the Mideast peace process and seek to have Ottawa's campaign discussed by the Arab League. And other than Israel, none of Canada's allies responded with punitive measures, including the United States.

Here in Canada, the pro-Israel lobby wasn't backing tough measures, either. "We are certainly not calling for dramatic Canadian responses and don't believe that the government is contemplating actions like closing missions," Shimon Fogel, the chief executive officer of the Centre for Israel and Jewish Affairs, said in an e-mail.

After Tuesday's meeting, Mr. Roth said Canada will seek to co-ordinate with the United States "on our approach at the UN.

"We're concerned about what's next – other UN bodies, especially the ICC," he said.

Overall, however, the meeting was less about penalties and more about what to do next. Mr. Baird and International Co-operation Minister Julian Fantino met for 90 minutes in a small committee room on Parliament Hill with Canada's ambassador to Israel, Paul Hunt, the Representative in the West Bank, Chris Greenshields, and ambassadors to the UN in New York and Geneva, Guillermo Rishchynski and Elissa Goldberg. It was a session, according to Mr. Baird's office, intended to discuss the new tensions in the Middle East, and to find ways to navigate them.

That has already been complicated by Israel's announcement that it will approve the building of 3,000 homes in the so-called E1 corridor. Nations around the world have sharply condemned that move, arguing it will separate key parts of the West Bank and make a peace agreement almost impossible – but Canada's response has been muted. Mr. Baird's spokesman, Mr. Roth, argued the Palestinian bid set in motion the Israeli reaction. "The Palestinian Authority's actions and provocative rhetoric at the UN General Assembly would obviously elicit a response from Israel," Mr. Roth said. "Neither is helpful to advance the cause of peace."

Opposition politicians, however, argued that the Conservatives have failed to express the kind of clear criticism of the Israeli settlement plan that has come from virtually every other country. "We haven't seen balance from the Conservatives on the Middle East," New Democrat foreign affairs critic Paul Dewar said.

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