lucy24 - 3:10 pm on Oct 15, 2012 (gmt 0)
To put it brutally: It's not "your" domain name. If your business address is 123 Main St, Yourtown, that has no effect on anyone doing business at 123 Main St, Othertown, or 123 Main St, Namelessville, or 123 Main St, Wayoutwest. Et cetera.
What good would it do to block the country? People from .xy aiming for example.com.xy would never land on your site except by mistake. Maybe you're thinking of g###, which owns every country in the world and sends you to your local tld by default.