JERUSALEM, Dec. 15 (JTA) — Israeli government officials this week defended a Cabinet decision to give special tax breaks and other financial benefits to Jewish settlements in the West Bank. The officials also dismissed Palestinian warnings of renewed confrontations over the issue. “We are not seeking a confrontation with the Palestinians,” said Defense Minister Yitzhak Mordechai, who met Sunday with Jewish settlement leaders. “We are aware of the threats, but they will not deter us,” he added. “We have said again and again that the settlements in Judea, Samaria and Gaza are deserving of support.” Mordechai’s comments came in the wake of last Friday’s Cabinet decision to grant level “A” status to the Jewish settlements, the same status accorded development towns and border communities. The status will provide settlements with a series of financial benefits, including subsidies for housing, education and investments. Such subsidies had been discontinued by the previous Labor government. The Netanyahu Cabinet decision not only drew criticism from the Palestinian leadership, but also from the United States and the European Union, which said Israel’s government was adding more friction to already-tense Israeli-Palestinian relations. Mordechai dismissed Palestinian Authority leader Yasser Arafat’s criticism over the weekend of the Cabinet decision as a “declaration of war” by Israel. “I think it is clear to everybody,” Mordechai told reporters. “We’d like to continue the peace process with the Palestinians.” The Cabinet move came in response to last week’s terrorist attack on a car carrying an Israeli family near Beit El, a settlement near the West Bank Palestinian town of Ramallah. The Popular Front for the Liberation of Palestine claimed responsibility for the attack, after which the perpetrators fled to Ramallah. Palestinian officials complained Sunday that Israel had tightened the closure it had imposed on the Ramallah area in the wake of the shooting. Israel closed off secondary roads and dirt roads leading from the self-rule enclave. Sunday’s move came in the wake of reports that Palestinians were using them to avoid Israeli roadblocks. Mordechai, who on Sunday visited the family of Ita Tzur, 42, and her son, Ephraim, 12, who were killed in the attack, demanded that the Palestinian Authority hand over the terrorists responsible for the shooting. But the head of all Palestinian security forces in the West Bank, Jibril Rajoub, said this week that the Palestinian Authority had no intention of handing over the suspects. Under the terms of the self-rule accords, suspected terrorists can be tried and punished within the self-rule areas. Observers have noted that the Palestinian Authority consistently avoided extraditing terror suspects to Israel, fearing that the move would completely undermine its credibility among the Palestinian people. But critics charge that the sentences imposed on convicted terrorists are merely token actions, adding that more than a few convicts have wound up with positions on the Palestinian security forces. Last week’s act of terror prompted calls from Jewish settlement leaders for massive building in the territories. The leaders also issued a thinly veiled ultimatum that they would take the initiative themselves if the government did not. While Cabinet members emphasized that no decision was made to establish new Jewish settlements, the move was interpreted by Palestinians as another step toward changing facts on the ground in the territories. Ahmed Karia, the speaker of the Palestinian legislative council, warned in an Israel Television interview that the council had called on Palestinians to “prepare for confrontation” against the Israeli government decision. Senior Israeli security officials also warned that the government decision could spark new violence in the territories. In September, Palestinian rioting after Israel opened a new entrance to an archaeological tunnel near the Temple Mount left 15 Israelis and 60 Palestinians dead. Prime Minister Benjamin Netanyahu said the remarks of Karia, also known as Abu Alaa, made it clear that the Palestinians were seeking an excuse to heat up the atmosphere. “You can find an excuse for everything,” Netanyahu told Israel Television. Meanwhile, Jewish settlement leaders had a mixed reaction to the Cabinet decision. They said it should have been made six months ago, adding that the criteria for applying the new “A” status might apply to less than half of the settlements.