This week the German news magazine Der Spiegel revealed that the German government had agreed a €1.5bn deal to sell 200 Leopard 2A7+ tanks to Saudi Arabia. The Leopard 2, manufactured by the Munich-based company Krauss-Maffei Wegmann, is among the world's best main battle tanks, but according to the company this model can be used in "operations in urban terrain as well as high intensity operations".

The Saudi deal illustrates the central contradiction in Germany's export-driven foreign policy. While Germany did not want to support military intervention in Libya to prevent a massacre by Muammar Gaddafi's forces in Benghazi, it is perfectly happy to supply arms to Saudi Arabia – which sent troops to Bahrain to help the authorities there put down pro-democracy protests in March. This, it seems, is Germany's contribution to the Arab spring.

The Federal Republic has traditionally been understood as a "civilian power" – that is, one that, unlike a great power, uses multilateral institutions and economic co-operation rather than military force to achieve its foreign policy goals and thus helps to "civilise" international relations. Its attitude to the use of military force seemed to be changing during the first decade after reunification.

In particular, after the Kosovo war in 1999 – when Chancellor Gerhard Schröder's "red-green" government agreed to send German Tornados on sorties as part of the Nato military intervention – it looked as if Germany was converging with France and the UK. But during the last decade, and in particular since Afghanistan and Iraq, opposition to the use of military force has once again hardened. For many Germans, there is apparently no such thing as a "just war", except one fought in self-defence.

However, the moral high ground that Germany often takes on issues of war and peace like Iraq and Libya makes it all the more striking that Germany is apparently quite happy to sell such large quantities of machine guns, tanks and submarines to others around the world – a blind spot in Germany's "civilian power" identity. In 2000, Germany issued new guidelines on arms sales, but they have not stopped arms sales booming along with the rest of Germany's export industry, which accounts for two-thirds of GDP growth in the last decade.

According to the Stockholm International Peace Research Institute (Sipri), Germany is now the third largest exporter of major conventional weapons after the United States and Russia, with 11% of the global market in the last five years compared to 7% for France and 4% for the UK. Thus while Germany spends less on defence as a proportion of GDP than France or the UK and contributes less to operations like the Isaf mission in Afghanistan, it sells more weapons than they do.

Moreover, those weapons are increasingly going outside of Nato. As European governments make defence cuts, arms manufacturers like Krauss-Maffei Wegmann are – like other German exporters – increasingly dependent on emerging economies for growth. That means above all rising powers like Brazil and India that are expanding their military capacity but also undemocratic regimes like Saudi Arabia.

By rejecting the use of military force, Germans like to think that they have made a break with the past. "Never again war" – originally a mantra for the German left – is now a principle of German foreign policy. But in terms of the Germans arms industry, there has been remarkable continuity. Whereas troop deployments must be approved by the Bundestag, arms deals are agreed in secret by the economics ministry or, in controversial cases like the Saudi deal, by the national security council. Only later are they announced to the public in an official report – the Saudi deal, for example, has not yet been officially confirmed.

Germany is now a geo-economic power that rejects the use of military force but nevertheless pursues its own economic interests. In particular, its foreign policy is increasingly driven by the needs of its export industry. Its arms sales to the rest of the world – including to undemocratic regimes like Saudi Arabia – make its claims to stand for "peace" seems a little hypocritical.