Canada's rookie foreign minister, John Baird, is a quick study. Called upon to state Canadian policy on the Middle East, he stuck to the time-honoured script. Canada wants a two-state solution, he said, and that has "got to be based on the 1967 borders ... with a mutually agreed upon swap as [U.S.] President Obama said."

There's just one problem. Baird's boss may not agree.

It's all Obama's fault. We wouldn't be in this fix if he hadn't uttered that fateful phrase, "1967 lines." Ever since, we've been trying to puzzle out why Prime Minister Stephen Harper objected to that phrase and whether his objection changes our long-standing policy on the Middle East. So far, it seems, the fiercely pro-Israel Prime Minister has strong reservations about Canada's policy - but his foreign minister says it stands anyway.

Confusing? Certainly.

First, let's be clear about what Obama did and did not say on May 19. He did not call upon Israel to return to its borders as they existed before it conquered the West Bank, Gaza and the Sinai in the 1967 war. Rather, Obama re-stated long-standing U.S. policy that the parties should negotiate how to change those lines in order to achieve two states living in peace.

"We believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps," he said, "so that secure and recognized borders are established for both states."

This principle has been widely accepted for a very long time indeed — by the United Nations, by the United States, by the European Union, by Canada and by Israel. Everyone knows that Israel has built up substantial settlements on the other side of the '67 lines and that, to keep them in any peace accord, it must trade away chunks of land on the Israeli side.

In 2001 at the Egyptian resort of Taba, for example, Israeli Prime Minister Ehud Barak agreed to do just that. The two sides also agreed that the 1967 lines would be the basis for the borders between Israel and a future Palestinian state.

But Barak was not the first to accept this concept of trading land for peace with the '67 lines as a starting point. In fact, it's always been the bedrock of the Middle East peace process.

UN Security Council Resolution 242

The keystone of that process is UN Security Council Resolution 242 of Nov. 22, 1967, which ended the '67 war by emphasizing "the inadmissibility of the acquisition of territory by war," and "withdrawal of Israeli armed forces from territories occupied in the recent conflict."

Eleven years later, in 1978, the hardline Likud government of Israeli Prime Minister Menachem Begin agreed at Camp David to trade the Sinai for peace with Egypt. Begin and the Egyptian President, Anwar Sadat, said, "The agreed basis for a peaceful settlement of the conflict between Israel and its neighbours is United Nations Security Council resolution 242, in all its parts."

So Obama's statement was no shocker — except that, until now, U.S. Presidents have chosen not to spell it out so explicitly. That's because it rubs Israelis the wrong way. Even those who do not believe peace is achievable agree that, if it were, it would involve trading land for peace, with the '67 line as the starting point in any negotiation.

But the 1967 line runs through Jerusalem. Israel has annexed East Jerusalem. The Palestinians don't accept that. Israel is prepared to trade away some lands — but not East Jerusalem. Best not to turn over that hornet's nest when you're trying to kick-start the peace process. It may be the bread-and-butter of diplomacy, but it's normally left out of Presidential speeches.

Enter the current Israeli government of Prime Minister Benjamin Netanyahu. Netanyahu lost the 2009 Israeli election but formed a coalition with other minority parties to unseat the winner, Tzipi Livni of the Kadima party. She'd won while trying to negotiate land swaps along the 1967 lines with the Palestinian Authority. But Netanyahu took power anyway, thanks to his coalition with the Yisrael Beiteinu party of his foreign minister, Avigdor Lieberman.

Lieberman has never accepted the old land-for-peace formula. "Negotiations on the basis of land for peace are a critical mistake," he famously said, "and will destroy us." Netanyahu doesn't go that far but, sitting next to Obama in the Oval Office, he bluntly dismissed the 1967 lines as "indefensible."

Netanyahu went on to a rousing reception in the U.S. Congress — and then phoned Stephen Harper. We do not know exactly what they discussed, but we do know that Netanyahu's government is extremely concerned about the growing movement towards a UN declaration of statehood for the Palestinians. Such a declaration is expected in September and is supported by about 150 countries so far. Combined with Obama's "1967" speech, the theory goes, it will fatally complicate any peace negotiation. The Palestinians, Netanyahu fears, will be emboldened to believe they can re-divide Jerusalem, which his government sees as the eternal and indivisible capital of Israel.

Soon after Netanyahu's call, Harper left for the G8 summit and there, according to other delegations and to Israeli sources, insisted on the removal from the summit communiqué of a reference to Obama's "1967 lines." Harper did not deny doing this. Asked where the two states which Canadian policy calls for would go, if not along the 1967 lines with agreed swaps, Harper did not say. Instead, he told reporters that he could not support a G8 statement that was "not balanced."

So is Canadian policy, which is perfectly in line with Obama's comment, "not balanced?"

That's where John Baird stepped in. Fresh from briefings by his officials, Baird admitted he was still not familiar with UN Resolution 242. But he certainly knew enough to re-state current Canadian policy. It has not changed, he said.

"We support a two-state solution," he added. "Obviously, that solution has got to be based on the 1967 borders ... with a mutually agreed upon swap as President Obama said."

So, according to Baird, Canadian policy remains in lockstep with the U.S. President's: 1967 borders; agreed swaps; just as Obama said.

And that's exactly what Harper wanted removed from the G8 communiqué. According to the Israeli newspaper, Ha'aretz, Avigdor Lieberman was the first to phone and say thanks. One question that arises is whether a congratulatory call from Lieberman is to be considered an achievement.