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(Bloomberg) — The Pentagon’s weapons buyer says the U.S. defense budget being delivered Tuesday has been designed to counter five threats: Russia, China, Iran, North Korea and extremist terrorist groups including Islamic State.

“The strategic environment that we all live in is changing, and it’s changing in a way that’s forced the United States to re-balance, if you will, its investments,” Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall told a conference in Canberra on Tuesday. The budget is the most “threat-driven” since the Cold War era, he said.

Kendall’s comments come 14 years after former U.S. President George W. Bush identified Iraq, Iran and North Korea as three key enemies as part of the so-called “Axis of Evil” against U.S. interests. The Pentagon will propose a $582.7 billion budget for fiscal 2017, including $58.8 billion for the war-fighting Overseas Contingency Operations fund, according to Defense Secretary Ashton Carter.

The budget has been driven by recognition that nations including China and Russia are “modernizing their military with the intention of being able to beat the power projection of the United States,” Kendall said. “That’s a problem that’s relatively new to us.”

Kendall said the budget is being delivered under tight financial constraints, with the department receiving about $15 billion less than originally planned.

To contact the reporter on this story: Jason Scott in Canberra at jscott14@bloomberg.net To contact the editors responsible for this story: Andrew Davis at abdavis@bloomberg.net Tony Jordan, Andy Sharp