Can they do that?

Man, I don't know why anyone would study world politics when 20 minutes on a grade school playground would introduce you to all the concepts necessary to understanding human relationships. The Bush administration was all but clucking and flapping their arms around last week when they came out with the argument that France and Germany didn't want war because they were too scared. Now ol' US is around the corner of the building, threatening to steal Chile's lunch money (read: international aid).

I'm sorry, but isn't this some form of extortion? Blackmail? Wouldn't this be illegal in the United States? How the fuck is this happening?