Using loaded words like extortion just distorts the discussion. We use foreign aid as a quid pro quo to attain our foreign policy objectives. For example, the foreign aid we give to Egypt was really part of the price we paid to get the Camp David Accords that stabilized relations between Egypt and Israel for over 30 years.
We hold nations accountable for their actions whether they receive foreign aid or not. Much of it is done in private through diplomatic channels. If you recall, we cut off aid to Pakistan in 1979 when they developed a nuclear weapon. We even refused to give them weapons they had already purchased. We resumed aid after the Soviet invasion of Afganistan so we could use Pakistan to provide covert assistance to the Afghans. We drastically reduced aid in the decade of the 1990s after the fall of the Soviet Union.
I was personally involved in negotiations with the Pakistanis to provide reimbursement for the burning down of our embassy in Islamabad in 1979. Pakistan is not an ally, but neither is it an enemy. The political situation in the country is complex and unstable. Still, we must develop a stable bilateral relationship given the strategic interests we have in the region. Pakistan has nuclear weapons and radical Islamic elements within the country, including in the ISI. It is a very dangerous situation, which we should not exacerbate with inflammatory rhetoric. It is counterproductive.
I didn’t intend to imply that foreign aid is never appropriate, but rather that it is as good a stick as it is a carrot and that (forgive me, I can’t help it) the striped pants crowd at Foggy Bottom spends too much time worrying about giving offense and not enough time making nations accountable for their actions and/or failures to act. I have no problem at all with Perry’s statement that all foreign aid starts at zero dollars and that nations earn the privilege of receiving US dollars. You and I would likely agree on the major points of any negotiating problem, we would simply have different methods of achieving the ends.