Russian President Vladimir Putin has sanctioned an unprecedented defense budget, allocating nearly one-third of the government's total expenditures as the prolonged war in Ukraine continues to strain resources on both sides after almost three years.

Announced on Sunday, the 2025 budget designates approximately $126 billion (13.5 trillion rubles) for national defense, representing 32.5% of state spending. This new allocation surpasses the previous record set for this year by a significant margin of $28 billion (three trillion rubles).

A modest decline in military expenditures is projected for 2026 and 2027, as detailed in the newly approved three-year budget plans, receiving the backing of Russian lawmakers from both parliamentary chambers.

The ongoing conflict in Ukraine remains Europe’s largest-scale war since World War II. Russia has made advances at several critical points on the front lines, even as it counters Ukrainian offensives in the Kursk region, where Kyiv has experienced its sole noteworthy military success this year.

This protracted, grueling conflict—frequently described as a war of attrition, where each side seeks to exhaust the other—has drained the resources of both Ukraine and Russia alike.

Related article: Challenges mount for Ukraine on the frontlines, but Russia also faces mounting pressures.

Ukraine has consistently faced shortages in both manpower and military matériel but has received billions in financial and military aid from Western allies. Just on Monday, Germany pledged more than half a billion dollars in additional military tools and equipment for Kyiv.

The future of US assistance remains uncertain as President-elect Donald Trump prepares to take office, potentially shifting Washington’s approach to the conflict.

In contrast, Russia wields a greater arsenal of weapons, a larger supply of ammunition, and more soldiers. However, the pressure on its economy and citizens continues to mount. Over the last two years, Moscow has sharply increased its military budget, pushing its economy to the brink. Inflation has surged, and companies now face critical labor shortages. In a bid to stabilize the situation, the Russian Central Bank raised its interest rates to 21% in October—a level unseen in decades.

Meanwhile, Ukraine continues to benefit from consistent support from international allies. German Chancellor Olaf Scholz visited Kyiv for the first time in over two years on Monday, pledging military aid valued at more than 650 million euros ($684 million).

As part of the upcoming assistance, Scholz announced that Germany would provide Ukraine with additional air defense systems, including the US-developed Patriot system, beginning next year.

However, this visit followed tensions in Ukrainian-German relations when Scholz made a controversial decision to speak directly with Vladimir Putin last month. This decision marked an end to years of European efforts to ostracize the Russian leader after his comprehensive invasion of Ukraine in 2022.

During a joint press conference with Ukrainian President Volodymyr Zelensky in Kyiv, Scholz emphasized that his conversation with Putin was to insist on Ukraine’s right to sovereignty and independence. He also reiterated calls for Russia to cease hostilities and withdraw its military forces.

Despite its numerical advantage in manpower over Ukraine, Russia faces deepening challenges, including significant troop losses on the battlefield. Recruitment efforts are also floundering—Russia’s previous partial mobilization effort led to hundreds of thousands of men fleeing the country.

To bolster its ranks, North Korea has recently sent reinforcements, with Ukrainian President Zelensky noting in November that approximately 11,000 North Korean soldiers were stationed in the Kursk region to support Russian military operations.

Additionally, North Korean-made weaponry has played an extensive role in Russia’s campaign, accounting for almost one-third of the ballistic missiles launched at Ukraine this year, according to Ukrainian defense officials and CNN’s analysis of attacks.

While the influx of soldiers from North Korea might temporarily strengthen Russia’s efforts, replenishing the material losses incurred during the conflict may prove far more challenging.

This article has been revised with updates. Contributions to this reporting were made by CNN's Fred Pleitgen, Daria Tarasova, Christian Edwards, and Lex Harvey.