Since writing an essay on “Germany as a geo-economic power” in 2011, I’ve been thinking a lot about the concept of “geo-economics”. Although the term is being used a lot at the moment, there is no shared definition of it. (Sanjaya Baru, who runs the programme on geo-economics at the International Institute for Strategic Studies, had a good introduction to the various usages of the term in Survival, which was originally written as an introduction for a conference on “geo-economics” in Bahrain in March 2012 that I attended.) There are basically two versions of the term: a “soft” version that is meant to capture the way states increasingly seem to pursue economic objectives and a “hard” version that is meant to capture the way that states increasingly seem to use economic means to achieve strategic objectives.

So in which of the two senses is Germany a “geo-economic power”? When I wrote the essay in 2011, I had in mind the “hard” version and in particular Edward Luttwak’s definition of “geo-economics”. In an influential essay published in The National Interest in 1990, Luttwak predicted that in some parts of world where the role of military power was diminishing, states would continued to compete within “a logic of conflict”, but would do so using “methods of commerce” rather than military methods”. That seemed to me to capture what seemed to be happening within the European Union, particularly since the euro crisis, and above all the way Germany had acted. But as I’ve thought more about “geo-economics” during the last two years, I’ve begun to wonder whether both versions of the term might apply to German foreign policy: one within Europe and the other beyond Europe.

Other analysts have also sought to draw a distinction between the types of foreign policy that European countries should and do pursue within Europe on the one hand and beyond Europe on the other. For example, in an influential pamphlet for the British think tank Demos that was published in 1999, Robert Cooper distinguished between a Westphalian “modern world” of classic nation states, the balance of power and military force, and a post-Westphalian “post-modern world” in which the distinction between domestic and foreign affairs was blurred, collective security had replaced the balance of power, and military force was no longer a legitimate tool. Thus, as he puts it, the “modern world” operates according to “the rules of Clausewitz”; the “post-modern world” operates according to “the rules of Kant”.

Cooper, then a foreign-policy adviser to Tony Blair and subsequently a key figure in the creation of the European External Action Service (the new European diplomatic service created by the Lisbon Treaty) and adviser to High Representative Catherine Ashton, argued that while Europe had become post-modern – EU member states were “post-modern states living on a post-modern continent” – the rest of the world had not. Europeans therefore needed to “get used to the idea of double standards”. In their relationships with each other Europeans could operate on the basis of laws and cooperative security, but “when dealing with more old-fashioned kinds of state, we need to revert to the rougher methods of an earlier era” – in particular, military force where necessary. “Among ourselves we keep the law but when we are operating in the jungle we also must use the laws of jungle,” he wrote.

The odd thing about German foreign policy is that it seems in a sense to be almost the diametrical opposite of the one suggested by Cooper. In my essay on “Germany as a geo-economic power”, I argued that the central paradox of German foreign policy is the contrast between Germany’s economic assertiveness and its military abstinence. But that contrast is linked to another, more subtle one between Germany’s Europapolitik and its foreign policy beyond Europe. Of course, no EU member state can use or even threaten to use military force within Europe and Germany is more reluctant than France or the UK to use it beyond Europe. But Germany does use economic power – also a form of hard power – as a way to coerce other states. However, if anything, it seems as if Germany is more willing to do so within Europe than it is beyond Europe.

Beyond Europe, Germany tends to reject not just the use of military force but even the use of economic power as a means of achieving strategic objectives and seems to think it can depend only on soft power. It seems almost as if it increasingly sees the rest of the world as nothing but an export market. In other words, it may be a geo-economic power beyond Europe in the sense that it seems to focus almost exclusively on the pursuit of economic objectives. Within Europe, however, Germany does seem to be prepared to use economic power to coerce other states (e.g. through tough conditionality). In other words it may be a geo-economic power within Europe in the sense that it uses economic means in a way that seems more Clausewitzian than Kantian – what Luttwak called “the methods of commerce” within a “logic of conflict”.