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Foreign Affairs Minister John Baird listens as Foreign Minister of the United Arab Emirates His Highness Sheikh Abdullah bin Zayed al Nahyan responds to a question on Parliament Hill in Ottawa, Tuesday September 18, 2012.Adrian Wyld/The Canadian Press

As John Baird met with an emir, a prince and an investment-fund leader in the United Arab Emirates, a big part of the Canadian interest was in doing business. But will the 'China rules' limit Canadian deals with the booming Gulf nation?

The Harper government, after all, set a new, warier approach to foreign investments by state-controlled enterprises (SOEs) when it approved the Chinese takeover of oil-sands firm Nexen late last year.

And while it was probably China and oil that sparked political sensitivities, all foreign SOEs were told they'll be watched. Sure, Stephen Harper's warning that few big deal would be approved applied to the oil-sands, but his government also said it  "will also continue to carefully monitor SOE transactions throughout the Canadian economy."

But it only takes a brief glance at Dubai and Abu Dhabi, the two biggest emirates, to see how closely the state and business are intertwined. The national personality is defined by its audacious economic planning, financed by portioning vast oil revenues into big states companies and funds – like a super-sized version of Alberta's Heritage fund with a futuristic zeal. Four of the 20 biggest sovereign wealth funds in the world are from emirates, with $800-billion, and there are smaller ones, too.

The emirs are the state, in a sense, and they make political and economic decisions in Dubai Abu Dhabi. They have say over how the money is spent, so there is state direction – even if it is channelled to diversifying the economy and building the knowledge, technology, and status of the emirates.

Does Canada want their money? On Tuesday, Mr. Baird, after a day of meeting with emirati leaders, including the CEO of one of those funds, said sometimes yes, and sometimes, it will take scrutiny. But the approach to UAE funds appears a little warmer than the tone applied last year, when Mr. Harper said Canada wanted less government in its economy not more.

"If it's a non-controlling investment, we welcome it. Controlling investment, as long as it's done for commercial reasons – which, I think, by and large, that's their [interest]," Mr. Baird told The Globe and Mail. "The transparency of sovereign wealth funds here is strong and the view that they're looking for commercial return is significant."

UAE funds and state companies have already invested in Canada. International Petroleum Investment Co. bought Nova Chemicals Corp. for $2.3-billion in 2009, which was the first time a sovereign wealth fund took full control of a Canadian company. "The Nova Chemicals investment was tremendously positive for Canada," Mr. Baird said. "It needed capital, it needed better management, and it got both."

The UAE is looking for returns, but it also wants to transform its economy, so its funds are often mandated to bring in knowledge or skills, or promote a new sector, other than oil, in the UAE. They're trying to develop green energy, airlines, tourism, and a knowledge economy. That means their state funds be more likely to look at other Canadian businesses rather than oil, if at all.

But they do buy in foreign oil. At a cocktail at the Canadian ambassador's residence in Abu Dhabi Tuesday night, one of the business people Mr. Baird met was Montreal native Frederic Lesage, chief strategic officer for TAQA, the Abu Dhabi National Energy Corporation, which bought three oil and gas plays in Canada in 2007-08.

He said TAQA saw returns, a place where a foreign company can own energy assets – in many countries national oil companies dominate – a stable business environment in Canada, and a chance to bring skills and knowledge from Canada into its global business. In effect, it wanted a knowledge transfer. Mr. Lesage didn't sound like he's still looking for new energy assets in Canada for TAQA to buy. With the post-Nexen rules, it's not clear whether they could.

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