Prime Minister Mark Carney's recognition of a Palestinian state has sparked debate over its implications under Canadian law. Initially, the recognition was contingent on the Palestinian Authority (PA) implementing reforms, such as demilitarization and the exclusion of Hamas from governance. However, Canada has granted statehood without these conditions being met, leading to calls for Palestine to be classified as a state sponsor of terrorism.

Recognition as a state means joining the international community of sovereign nations, which comes with both rights and responsibilities. While states enjoy diplomatic privileges and protection from foreign courts under the principle of sovereign immunity, they are also expected to refrain from acts of aggression, atrocities, and terrorism.

Canada's State Immunity Act establishes a framework that allows for a terrorism exception to sovereign immunity. This means that foreign states involved in financing or facilitating terrorism can be held accountable in Canadian courts. Currently, only Iran and Syria are designated as state sponsors of terrorism in Canada. Advocates argue that Palestine should be added to this list due to its governing institutions' actions.

The PA has been accused of providing financial support to convicted terrorists and the families of individuals who have carried out attacks. Critics argue that this practice is not welfare but rather a reward system for terrorism, undermining the deterrent effect of imprisonment and perpetuating recruitment for future attacks. Although the PA has claimed to have ended this program, there are reports indicating that payments continue.

Additionally, the Palestine Liberation Organization (PLO), which represents Palestinians internationally, includes factions responsible for various terrorist acts, including hijackings and bombings. Notable groups within the PLO, such as the Palestine Liberation Front (PLF) and the Popular Front for the Liberation of Palestine (PFLP), have histories of violence against civilians and are designated as terrorist entities in Canada.

The dominant political party in both the PA and PLO, Fatah, has also been linked to the Al-Aqsa Martyrs’ Brigade, which has committed numerous acts of violence, including suicide bombings and kidnappings. Analysts have noted that Fatah has provided financial and logistical support to this group, further complicating the narrative surrounding Palestinian governance.

Under Canadian law, actions that would constitute terrorism if carried out in Canada can lead to a designation as a supporter of terrorism. The PA, PLO, and Fatah's activities, including payments to convicted terrorists and involvement in violent acts, meet this criterion.

Designating Palestine as a state sponsor of terrorism would have significant legal implications. It would allow victims of Palestinian terrorism to seek justice in Canadian courts and could lead to the seizure of state assets to satisfy judgments. Furthermore, it would reinforce the principle that recognition of statehood does not exempt a state from accountability for its actions.

Critics argue that by recognizing Palestine without requiring reforms, Canada has inverted the expected order of rights and responsibilities. They contend that sovereignty should be earned through adherence to obligations, not granted in anticipation of change. The fundamental duty of any state is to refrain from supporting terrorism, and advocates assert that Palestine has failed to meet this standard.

In light of these considerations, there are growing calls for Canada to officially designate Palestine as a state supporter of terrorism, aligning its legal stance with its recognition of statehood.