The annexation of Crimea by Russia in February 2014 and the ongoing conflict in Eastern Ukraine changed the security environment in Europe and led to a new global confrontation between Russia and NATO countries. It has also influenced the priorities and capabilities of the military modernization in Russia. On the military level, the conflict led to the formation of two strong contingents in the Russian army – in Crimea and near the borders with Ukraine. On the economic level, Western and Ukrainian sanctions forced Moscow to cut its budget for the military industrial complex and consider import substitution, which have negative short-term and long-term effects for the Russian army. On the strategic level, the Russian leadership began to perceive the probability of a direct conflict with NATO to be higher than ever since 1991.