They are not mutually exclusive. Bush has the final say on US foreign policy and Condi works for him. The State Department implements foreign policy, which is formulated by the foreign affairs agencies within the USG and approved by the President.
There are foreign policy considerations since Italy is part of the coalition with troops on the ground in Iraq. Bush can't just dismiss the Italian reaction by telling them to "STFU, get out of our face, that we are BUSY in Iraq, and to go urinate up a rope."
I knew of Presidents in the past who would have (more or less).
He also can not dismiss the ransom that was paid. That money will be used to slaughter more Iraqis and blow up more American soldiers. For what? This commie?