It is the first step toward a much needed and long overdue solution to the situation of the Palestinian people. If you insist on looking at it from a "stick/carrot perspective" it would be more appropriate to interpret this as a punishment of Israel for not doing anything to move toward peace. In fact Israel has rather been taking many steps that are counter-productive to peace. At this point some people are probably thinking that the "settlement freeze" was a huge step toward peace. They should keep in mind that the freeze was rather a slush, since it only stopped some construction in some places, which was much less than what was expected by both the Palestinians and "the world". It would also be a good idea to remember that once "the world" had pressured the Palestinians to accept this half-measure as sufficient and they had begun negotiations, Israel chose to terminate the slush. I'm sure there are people who still try to spin this as a huge Israeli commitment to peace. Ok they might be able to convince certain segments of the Israeli population, but it will not work on an audience that does not recognize any inherent right for Israel to forcibly expand its borders. To the international onlooker Israel (read: Bibi) appears to do anything it can to maintain the current situation where Israel is expanding its settlements and where the Palestinians are suffering under the occupation. The mounting pressure on Israel from all over the world is a reaction to that Israeli policy.
Defense Ministry says had no knowledge of alleged improper defense deals by Gal Hirsch (Haaretz)