The issue was vigorously discussed during a 90-minute meeting in Ottawa involving Foreign Affairs Minister John Baird, International Co-operation Minister Julian Fantino and four envoys who were called home for talks.
Canada strongly opposed the Palestinians' successful effort last week to win elevated status at the UN, so Baird recalled senior diplomats from Israel, the West Bank and the UN missions in New York and Geneva to discuss a response.
After it initially appeared that Ottawa was reviewing its aid pledge, Baird's spokesman told The Canadian Press Tuesday night that Canada's five-year, $300-million commitment to the Palestinians would be maintained when it expires at the end of the current fiscal year in March.
"The current $300 million commitment will be followed through on," Rick Roth said in an email.
"CIDA will evaluate the program in the Palestinian Authority for the outcomes achieved with taxpayers' dollars, as they do with all programs" he added.
"Future commitments by CIDA for programming in the Palestinian Authority will be dependent on their ability to achieve meaningful results for those most in need and the commitment of leaders in the Palestinian Authority to prioritize the basic needs of the people."
Along with the U.S. and Israel, Canada was one of only nine countries to vote against the Palestinian motion at the 193-country General Assembly.
Canada has since offered only the mildest, muted criticism of the Israeli response, which was to announce new settlements on Palestinian land and the withholding of $100 million in tax rebates and other funds it collects for Palestinians.
All of Canada's major Western allies have taken a strong stand against the Israeli response, including the U.S., which broke from its earlier UN support to harshly criticize the settlement announcement.
In his response Tuesday night, Roth clarified an earlier statement that said Fantino would review what happens next.
"Our $300 million over five years in support of security and humanitarian aid is important," Roth said in a statement detailing the meeting earlier on Tuesday.
"We intend to, by and large, see these projects through. The relevant minister will, as a matter of course, as they do on all matters, review the path forward once the projects have been successfully completed."
The money goes toward strengthening the Palestinian justice system, private sector economic development, and health and education assistance.
Roth said the diplomats and the two ministers had "a healthy exchange on where we are and where we want to go."
Opposition MPs said they were reassured that the government was not planning to retaliate against the Palestinians for its success at the UN.
"What we were hearing before from the Conservatives was before the vote at the UN, that if this went forward there would be ramifications by cutting aid and sending the representatives packing," said NDP foreign affairs critic Paul Dewar.
"So hopefully there's been enough pressure on the Conservatives that they've changed their mind. I would be very supportive of them going even further and increasing aid, if anything."
Interim Liberal Leader Bob Rae said he was reassured by the decision, but he criticized Baird for not speaking out against the new Israeli settlement plan.
"I'm not sure we needed to go to all the trouble of recalling all the four ambassadors to come to that very simple conclusion," said Rae.
"I think the issue of the day now is what is the position of Mr. Baird with respect to the decision of the government of Israel to go ahead with the construction of 3,000 new homes on the West Bank," he added.
"This clearly represents a problem. It is not within the policy framework that Canada has had since 1967 under Mr. Mulroney, under every Liberal and Conservative government since that time."
Roth's earlier statement on the meeting reiterated the government's stance on the Palestinian recognition issue.
"Unilateral action on either side is unhelpful," he said. "The Palestinian Authority's actions and provocative rhetoric at the UN General Assembly would obviously elicit a response from Israel. Neither is helpful to advance the cause of peace."
Tensions were ratcheted up further Tuesday after a warning from a Palestinian official that his government could pursue war crimes charges at the International Criminal Court if Israel doesn't stop settlement construction.
The UN's recognition last week of the state of Palestine as a non-member observer in the general assembly opened the door for the Palestinians to gain entry to the ICC.
A senior aide to Palestinian President Mahmoud Abbas said late Monday that Israel's continuing settlement plans and "stealing our money" could force a move to the ICC.
"We still don't recognize the PA/PLO as a state. We will work with the Obama administration on our approach at the UN, in New York and in Geneva. We're concerned about what's next — other UN bodies, especially the ICC," Roth said Tuesday.
The Obama administration has said it does not want to see the Palestinians go after Israel in the ICC.
Canada would do "everything we can" to get the two sides back to the negotiating table, Roth added.
Australia, Brazil and Egypt summoned their local Israeli ambassadors Tuesday to protest the continued settlement construction, joining the actions of five European countries a day earlier.
British Foreign Secretary William Hague said Tuesday that further diplomatic steps would be taken against Israel if the settlement building continues.
But he said cutting diplomatic ties and sanctions were off the table. Of the latter, he said: "I do not think there is enthusiasm around the European Union for that."
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