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The E1 project at the Jewish West Bank settlement of Maaleh Adumim, near east Jerusalem, Sunday, Dec. 2, 2012. Israel on Sunday roundly rejected the United Nations' endorsement of an independent state of Palestine, and announced it would withhold more than $100 million owed to the Palestinians in retaliation for their successful statehood bid. Israel has a master plan to build 3,600 apartments and 10 hotels on the section of territory east of Jerusalem known as E1. The Palestinians have warned that such construction would kill any hope for the creation of a viable state of Palestine.Ariel Schalit/The Associated Press

When the Palestinian Authority took unilateral action and sought increased status at the United Nations, Canada vigorously denounced the move as a blow to the peace process and threatened serious sanctions in retaliation.

Now Israel has announced plans to build homes in a controversial settlement, a move which, if carried out, threatens to do far more damage to the process. The United States has singled out Israel's actions, saying they "set back the cause of a negotiated peace." Britain, France and Sweden have summoned Israel's ambassadors to their respective countries to protest the new construction, saying it would be illegal under international law. If Canada's ultimate goal is to advance the peace process, it cannot fail to be equally strenuous in its reaction to Israel's latest actions.

We said last week that Canada was right to argue against the Palestinian Authority's bid for status as a non-member observer state, but felt it was wrong for the government to threaten, through back channels, to close the Palestine mission in Ottawa and cut aid to the region if the PA persisted. Thankfully, in the wake of the UN's vote in favour of the authority, Foreign Affairs Minister John Baird appears to have backed away from these sanctions and limited himself to the recalling of Canada's representatives from Tel Aviv, Ramallah and the UN for discussions about "next steps."

But Mr. Baird's vociferous response to an action it slammed as counter-productive to the peace process stands in stark contrast to its generic reaction to Israel's counter-productive settlement announcement. "Canada's position is that unilateral actions on either side do not advance the peace process," said Prime Minister Stephen Harper's spokesman.

Canada's strident defence of Israel's interests in the UN vote was legitimate but its zealous threats to punish the Palestinians damaged its ability in Arab eyes to contribute to a much-desired two-state solution. Ottawa could re-establish its independence by strongly condemning Israel's settlement gambit.

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