Ryan Sager's reading:
The explanation that makes more sense to me is that it's something closer to the old salesman's free-pen trick on a grand scale. A free pen from, say, a pharmaceutical rep to a doctor seems harmless enough. But it triggers a strong reaction in people: reciprocity. You scratch my back, I'll scratch yours. Social science experiments have consistently shown that giving people thing - even tiny little trinkets - can make them reciprocate in substantial ways. There's a reason this free-pen trick exists, and that's because it works.
President Obama has just received the biggest free pen in the world. I'm not sure what happens to the substantial cash attached to the award, but the prestige is a big free pen in itself. And the intent seems clear enough to me. We, the international community, have bestowed our highest honor upon you. Now, you feel at least a little more inclined to lean in our direction on: global warming, Israel-Palestine, etc.
David Frum has related thoughts. Kevin Sullivan counters.