Incentives are capable of creating favourable environments in which peace processes can make progress. This is especially true for mega incentives, which can assist in overcoming political and socio-psychological barriers to peace. In Israeli-Arab peacemaking, incentives have not yet proven efficient. To date, they have been used in a limited and inefficient manner. In 2010, the US offered Israel incentives in return for an extension of Israel’s settlement freeze. This move failed due to unfavourable political conditions and scepticism regarding its ability to bring about a major breakthrough. Nevertheless, it signaled that incentives are now an integral tool in US diplomacy and could serve as a step towards crafting a multi-national mega incentive package for Middle East peace.