In a large bowl, beat butter with an electric mixer on medium to high speed for 30 seconds. Add brown sugar, baking powder, cinnamon, baking soda, and salt. Beat until combined, scraping side of bowl occasionally. Beat in egg and vanilla. Beat in as much of the flour as you can with the mixer. Stir in any remaining flour. Divide dough in half. Cover and chill dough about 1 hour or until dough is easy to handle.
Preheat oven to 375 degrees F. Grease two large cookie sheets; set aside. For filling: In a small bowl, stir together fig preserves and orange peel.
On a lightly floured surface, roll each portion of dough into a 12x8-inch rectangle. Using a fluted pastry wheel, cut around the edge of each rectangle. Using the pastry wheel, cut each rectangle into twenty-four 2-inch squares. Place half of the squares 1 inch apart on the prepared cookie sheets. Spoon 1/2 teaspoon of the preserves in the center of each square on the cookie sheets. Top each with a second dough square. Gently press edges with the tines of a fork to seal. If desired, lightly brush tops of cookies with milk and sprinkle with coarse sugar.
Bake in preheated oven for 8 to 10 minutes or until edges are lightly browned. Transfer to a wire rack; let cool. If desired, sprinkle tops with powdered or course sugar just before serving. Makes 24 cookies.