How can you claim something is a vital interest if you say it is a punishment for the bad behaviour of your opponent? The simple fact that Israel claims it wants to punish the Palestinians proves that building those settlements in occupied territory is a matter of choice, not of necessity. This is just another short-sighted, failed attempt of Israel to get a point accross. But the point is not about justice and breaking promises, it is about colonialism. You don't punish your equal, you punish a little child that didn't do what it was told, you punish the slave or the indiginous people for daring to oppose the will of its colonial ruler. How naive is the Israeli government to think that they can get away with this? Colonialism is soo 19th century!
from the article: Netanyahu aides: Israel will not cancel settlement expansion plans