Prime Minister Benjamin Netanyahu on Sunday defended his government’s plans to approve thousands of new housing units in the West Bank by saying he was taking a page out of the playbook of the country’s most revered dovish leader.

Netanyahu told his cabinet that by approving 3,000 new homes in East Jerusalem and the West Bank, Israel was following in the footsteps of former prime minister Yitzhak Rabin, who in 1975 approved construction in response to a UN conference equating Zionism with racism.

“The response to the attack on Zionism and the State of Israel must reinforce and underscore the implementation of the settlement plan in all areas in which the government decides regarding settlement,” Netanyahu said, quoting Rabin verbatim. “These are not my words…. Today we are building and we will continue to build in Jerusalem and in all areas that are on the map of the strategic interests of the State of Israel.”

Rabin, remembered as a hero of Israel’s left for signing the Oslo peace accords before his assassination in 1995, approved a number of settlements during his first stint as prime minister in the 1970s.

Netanyahu’s statement seemed to confirm suspicions that the move was a punitive measure following the Palestinian Authority’s receipt of an upgrade for “Palestine” to nonmember observer state at the United Nations on Thursday.

Israel came under intense international criticism after plans were announced Friday to build the 3,000 new housing units.

UN Secretary-General Ban Ki-moon’s spokesperson criticized the move, saying it “risks completely cutting off East Jerusalem from the rest of the West Bank” and that “it would represent an almost fatal blow to remaining chances of securing a two-state solution.”

Ban repeated his call for all parties to “resume negotiations and intensify efforts towards a comprehensive, just and lasting peace and urges the parties to refrain from provocative actions.”

European Union Foreign Policy chief Catherine Ashton said Sunday that she was “extremely concerned… The European Union has repeatedly stated that all settlement construction is illegal under international law and constitutes an obstacle to peace.” She called on Israel not to go through with the planned construction.

Ashton said that after the UN vote last week, she urged Israel and the Palestinians to resume “direct negotiations without delay or preconditions,” and therefore is “extremely worried by the prospects of settlement expansion on such a scale.”

The building announcement was also heavily criticized by the USthe UK and France, among others.

Also on Sunday, Finance Minister Yuval Steinitz said Israel would withhold NIS 450 million in Palestinian tax revenues to offset a debt to the Israel Electric Corporation, a move widely seen as punishment for the upgrade.

Israel rejected the United Nations upgrade, saying it impeded the peace process and was in contravention of the Oslo peace accords.

“The unilateral move by the Palestinian Authority at the UN General Assembly constitutes a flagrant violation of agreements signed with the Israeli government,” Netanyahu said. “The Israeli government rejects the decision of the General Assembly.”

The cabinet on Sunday also passed a resolution saying it would not negotiate on the basis of the UN General Assembly’s recognition of a state of Palestine in the West Bank, east Jerusalem and Gaza Strip.

The Palestinians say the UN upgrade was needed to give them greater leverage in talks with Israel.

Steinitz defended the move to approve settlement housing on Sunday, telling Channel 10 that the Palestinian UN bid was a “provocation” and an attempt to be granted a state “without recognizing Israel, demilitarization or security arrangements.”

Steinitz added it was time to “connect Ma’aleh Adumim to Jerusalem,” referring to the E1 area where some of the construction is slated to take place. “It should have happened long ago.”