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Canadian Foreign Affairs Minister John Baird, left, meets Palestinian president Mahmoud Abbas in the West Bank city of Ramallah on April 6, 2013.Heidi Levine/The Globe and Mail

They didn't settle their "profound differences." But during Foreign Affairs Minister John Baird's visit to the West Bank, Canada and the Palestinian Authority agreed to move on and work towards a new aid package.

The tone was far less bitter than the sharp rhetoric used last November when Canada campaigned against a Palestinian bid for observer-state status at the UN. At the time, the Harper government warned of consequences if the Palestinian bid went ahead and Palestinian officials said they would rally the Arab world against Canada.

On Saturday, after Mr. Baird met Palestinian Authority President Mahmoud Abbas and other senior Palestinian figures in Ramallah, there were no threats, or tit-for-tat warnings, and the two sides held talks on the kind of aid projects Canada might support in a new multi-year assistance package.

"We were able to discuss our differences and our agreements, and to agree that differences might stay but it's good to keep talking about them among friends, and to move forward," Palestinian Foreign Minister Riyad al-Maliki said.

At the height of the battle over the UN bid, there were looming questions about whether Canada might cut its aid, a $300 million package over five years.

But in Ramallah, Mr. Baird discussed the Palestinians' aid priorities and said he would work on details and take a proposal for a new multi-year aid program to the federal cabinet.

The last five-year aid plan ended April 1 but will, in effect, be stretched to six years because $60 million has not yet been used, Mr. Baird said. The funds will go primarily to the construction of a courthouse in Tulkarem that has not yet been completed. New aid projects, of course, await a cabinet decision on a new aid package.

Mr. Baird said Canadian aid projects, notably in justice and security, have made a visible impact in Ramallah and the West Bank, and called them "an effective use of development dollars." Palestinian Prime Minister Salam Fayyad, in a separate meeting, told Mr. Baird that Palestinians want Canada to support projects for security, economic development to promote business in the West Bank, and for health and education, Mr. Baird's aides said.

But Mr. Baird also acknowledged the two sides disagree on the Palestinian bid for UN recognition and the path to peace talks. "We have some profound differences of opinion on the way forward, but not on the need to go forward," he said.

Mr. Baird repeated his stance that both sides should go back to talks "without preconditions" – a reference to the long-standing Palestinian insistence that Israel must stop settlement activity to make negotiations possible.

And clearly, the differences colour the relationship. Mr. al-Maliki argued Canada's position on Palestinian issues hurts it relations with other countries, and continuing aid will improve that view.

"Many countries, they look at the relationship with Canada from the eyes of Canada's position vis-à-vis Palestine," he said. "That's why it's very important to make a note that we do welcome Canada's contribution, continuous contribution to state-building."

U.S. Secretary of State John Kerry is due to arrive Sunday to discuss proposals for re-launching the peace process between Palestinians and Israel.

Mr. Baird, himself in the midst of a Mideast tour, dismissed a question about whether Canada could play a more effective role in Mideast peace if its stance was not so unpopular with Palestinians.

"We don't, certainly, make foreign-policy decisions based on public opinions polls. We take positions based on what we think is right and what we think is wrong," he said. "We may have profound differences of opinion on a few issues with the Palestinian Authority. I think it's tremendously important to engage and to work together where we can, and where we are of like mind."

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