The Swedish corvette Visby is seen in the search for suspected "foreign underwater activity" at Mysingen Bay, Stockholm, Oct. 21, 2014. Reuters

Sweden is expected to add two new submarines to its underwater fleet following a failed attempt to locate a suspected Russian mini-sub in the waters near Stockholm last year, the armed forces announced this week. The decision comes at a time of increased Russian assertiveness that has put Scandinavian countries on edge.

"Underwater capacity is a central part of Sweden's defense in peacetime, as well as during emergencies and war," Defense Minister Peter Hultqvist said in a statement Thursday, according to Defense News. "The order ... will ensure Sweden's underwater capacity beyond 2030.” The subs will come at an estimated cost of 8.2 billion kronor ($945 million USD) for the two of them.

Sweden’s beefing up its submarine fleet stems from reports in October of sightings of a foreign submarine off the coast of Stockholm. A weeklong naval search failed to turn up any evidence of the sub, raising concerns over the country’s defense capabilities. Although the nationality of the sub was never verified, Swedish officials believed it to be Russian, Defense News reported.

Last week, Sweden’s military asked to increase the country’s defense spending by 6 billion kronor ($700 million USD.) If approved in April, when the spending budget goes to a vote, the money would go toward improving the navy’s anti-submarine capacities as well as establishing a permanent military presence on the Baltic Sea island of Gotland, which lies between Sweden and Latvia.

Sweden signed a defense pact with neighboring Finland in February and with Denmark earlier this month, partnerships likely provoked by the annexation of Crimea by Russia in March 2014. The pacts followed incidents of Russian jets flying near Sweden last year as well as the Russian air force’s simulated bombing raids on the country’s Baltic coast in 2013. Denmark is a NATO member, but traditionally neutral Sweden and Finland are not.