National governments are spending a record amount of money on defense and arms, as Russia's invasion of Ukraine and a more complicated geopoltical environment push countries to buy more military equipment.

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Global spending on defense increased by 3.7% in 2022, according to data released by the Stockholm International Peace Research Institute, a think tank that tracks arms spending.

Half of that increase was due to a 640% surge in military spending by Ukraine, as the country quickly expanded its armed forces to defend against the invasion. It’s the largest annual increase in military spending in SIPRI’s data (which extend to 1949), and does not include the billions of dollars’ worth of military aid sent to the country by foreign governments. (Russia’s military spending, according to SIPRI’s estimates, increased by 9.2% in 2022, and the country still spends about 60% more than Ukraine does.)

But it’s not just Ukraine, as countries across Europe spend more on defense. Including Ukraine, European spending increased by 13.4%, and eastern European spending specifically jumped by 57.8%. Finland, which borders Russia, reported a 35% increase in military spending last year, after the country agreed to buy F-35 planes worth $9.4 billion last February, in the weeks preceding Russia’s invasion of Ukraine. (Finland joined NATO as the alliance’s newest member on April 4.)

European leaders are now calling for an increase in defense spending in the wake of Russia’s invasion, as the region struggles to replenish its stockpiles following the provision of military aid to Ukraine. Military spending in western and central Europe is now back to where it was in 1989, the end of the Cold War, according to Bloomberg.

And spending is likely to increase. In a January speech, French president Emmanuel Macron said the country would earmark $448 billion in defense spending between 2024 and 2030, a 40% increase from what was allocated between 2019 and 2025.

Yet Europe’s arms industry is struggling to catch up with demand, potentially leaving a gap for new players like South Korea, which can deliver arms faster. While South Korean policy currently does not allow for providing military aid to countries currently in conflict—like Ukraine—the country’s president has suggested he may be willing to make an exception for Kyiv.

Asia tensions

Geopolitical tensions in Asia, particularly surrounding China, are also driving increased military spending by major Asian powers.

China, by far the largest spender on defense in the region, spent 4.2% more on its military in 2022.

Japanese military spending grew by 5.9% in 2022, according to SIPRI data. Defense expenditures are likely to grow further after Tokyo unveiled a new security strategy last December. The country pledged to spend at least 2% of its GDP on defense by the 2027 fiscal year, up from about 1% now. Japan also cited China as the country's biggest security challenge.

Indian military spending also jumped by 6% in 2022. The country is trying to modernize its military, in part due to concerns over China following violent clashes on the border between the two countries in 2020.

“The continuous rise in global military expenditure in recent years is a sign that we are living in an increasingly insecure world,”  wrote Nan Tian, a senior researcher at SIPRI, in a statement.

The war in Ukraine has in one way constrained some military spending, however. India has long partnered with Russia for its arms development and spending, yet financial sanctions on Moscow have held up payments, and arms deliveries, for up to a year. India is now considering using either euros or United Arab Emirates dirhams to pay for Russian arms, reports Bloomberg.

This story was originally featured on Fortune.com

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