"The sanctions are beginning to have a good effect," Baird told a news conference at the Herzilya Conference on the Balance of Israel's National Strength and Security.
"They take time to work, and I think you have seen in the last two or three months they certainly are beginning to have an effect."
It's critical to redouble international efforts against Iran's nuclear plans, he added. "We must continue to take every single diplomatic measure, to close any loopholes and continue the discussions about going forward in the future."
During his talks with Israeli leaders, Baird said he also heard concerns about the "abysmal" human rights situation in Iran, which is also fuelling tensions in Southern Lebanon, the Gaza Strip and Bahrain.
The same issues regularly come up in his discussions with Arab foreign ministers, he added.
Asked about the possibility of a military strike against Iran, Baird repeated his echo of U.S. President Barack Obama's recent warning that "everything is on the table," although he reiterated the need for ongoing diplomatic efforts. Sanctions against Iranian oil or financial institutions "represent the best hope at the current time to seek a change in its position," he said.
Baird backed Israel's call on the Palestinians to return unconditionally to the negotiating table. Quoting Israeli Prime Minister Benjamin Netanyahu, Baird said, "We've got to stop negotiating about the negotiations."
Asked whether he considered Israeli West Bank settlement construction illegal under international law, and an obstacle to renewed negotiations, Baird said "I think that unilateral actions on both sides are distinctly unhelpful."
But he was hopeful the impasse would be hurdled. Both sides have said in the past that they regard the 1967 borders as a starting point for mutually agreed upon swaps, said Baird. "That's been their position and I think this is a direction that they will pursue."
On Syria, Baird applauded the Arab League's approach to the UN Security Council for sanctions as "a welcome development" that's supported by Canada. "There's no silver bullet and no magic for the challenges in Syria."