First, among a tiny minority consisted of 9 countries including the usual suspects Israel and the US, it voted “no" on General Assembly Resolution 67/19, which elevated Palestine’s status to a non-member observer state, and promptly issued vague threats that “there will be consequences" (a line China loves to use, by the way) regarding its relation with the Palestinian National Authority, which speculation has it that the threats concern the renewal of $300 million worth of foreign aid.
Canada is clearly standing on the wrong side of history on that alone, especially when considering the fact that no major power other than the United States, voted against the resolution. In fact, a majority of them, including France, Japan, Italy, Switzerland, Spain, and so on, voted in favour of the resolution, leaving a only a handful, namely the UK, Germany, Australia and Korea (South) abstaining (the break down of the vote can be seen here). Now, to add insult to injury, Canada recalled its diplomats from Israel, West Bank and the UN in protest.
It does not matter where Canada stands on the Palestinian question. The move just looks very bad in the eyes of most Canadians and the international community, and it diminishes Canada’s influence in international affairs. Why? For one, others will perceive it to be blindly following whatever the US is doing. It can be viewed as if Canada has no more moral standing of its own and it has abandoned its long stance on the promotion of peace and good Canadian values. Worse still, the threats Canada issued are mostly empty; if the Palestine National Authority cannot receive aid from Canada, it will just solicit gap filling monies from the supporting countries like France, India, or most realistically and importantly, China and Russia. Cutting off foreign aid is just an open invitation for China and/or Russia to enter into Middle East affairs. China would jump at this opportunity. In addition, it would be hard to ignore the fact that the Arab Spring has drastically changed the power dynamics in the Middle East that the US can no longer impose its will like it did in the post-Cold War period. Ironically, the adoption of this resolution itself is the best testament of that new power dynamics. How could Canada miss such obvious writing on the wall?
Assuming the Conservative government of Canada is staunchly pro-Israel, and it would not want to see the existence a Palestinian state no matter what, which is in itself not wrong in the context of international political game–the morality of it is an entire different question, it could still have made a point on that without drawing the ire by simply voting abstention, just like what the UK and Australia did. Assuming the strategic relationship with the US is the main motivation behind any Canadian political decision, it is hardly conceivable that abstention voting will draw credible retaliation from the US, seeing how Australia did just that and it is in a very similar strategic situation as Canada concerning the relationship with the US (such as the purchase of F-35s, which is highly controversial and facing much domestic opposition, and their roles in the Trans-Pacific Partnership), and Japan, a country wholly dependent on the US for its defence, even voted in favour (South Korea abstained as well)!
Strategically and diplomatically, the “no" vote is as baffling as it is damaging. What would Canada gain by withdrawing its diplomatic missions? Absolutely nothing. Would Canadians be happy to see level of foreign aid to a much needed and war-torn region dropped drastically? Some poll suggests not. Yet a saving throw could still be made to regain Canada’s relevance in global affairs at this moment by: 1) enlarging the size of foreign aid to Palestine, more specifically to the Palestinian National Authority (so to downplay Hamas’s influence; one could hardly be faulted to think that the worsening of the economic situation would turn people to extremism); 2) protesting the building of settlements in the West Bank (the Obama administration condemned it as well); and 3) initiating a new round of dialogue among all parties in that region, pronto. All of the above can be done without recognising Palestine’s new status (just pretend it did not happen).
Granted, the suggested courses of action above are anything but substantial–objectively speaking, nothing can and will be changed in the region in the near future. Actions 2) and 3) are nothing but hot-air, but that’s what Canada should be eyeing right now: damage control without major costs. Enlarging foreign aid will net Canada some public debts and go against the attempt to reduce debt (to be honest, it is not something any country should be doing right now; see Paul Krugman here and here), but a couple hundred millions is nothing comparing to the 1.5 trillion public debt. And really, Canada’s fiscal position is really quite good relative to other advance countries’ (also much much lower when counted in net debt as oppose to gross debt, which gives the figure above). If it is not too expensive, showing the Palestinian some good will is quite beneficial. It will show that Canada is above politics and, in accord with the Canadian values and traditions, willing to provide what is desperately needed to a people living in perpetual crisis, and that’s the best option Canada has right now.
Update: F-35s would cost much more than foreign aid, and contribute much more to the debt, just saying.
Update 2: Net debt is a better measure in assessing a country’s debt burden.