MOSCOW, March 16 (RIA Novosti) - The production of Russian weapons in eastern Europe without licenses causes direct damage to the country's economy and interests, a first deputy prime minister said Friday.

"It is not a secret that such production is carried out in a number of eastern European countries, including NATO members," Sergei Ivanov said adding that the illegal production should be stopped.

He said this is "intellectual piracy," adding that these countries supply Russian weapons to world markets at dumping prices.

"Despite our appeals to these countries, we have received no reasonable answer," he said.

Russia says it suffers major losses from the counterfeit manufacture of Kalashnikov assault rifles in Bulgaria. The armies of 47 countries use the AK-47 assault rifle, known as the Kalashnikov after its designer, Mikhail Kalashnikov.

About 100 million AK-47s and modified versions are believed to circulate around the world, but many of them are produced illegally.

Bulgaria's Arsenal, whose license to produce Kalashnikov rifles expired a long time ago, displayed a wide range of counterfeit rifles at the DSA 2006 arms show in Malaysia.

Ivanov said earlier that the annual sales of unlicensed small arms on the international market totaled about $2 billion, with counterfeit Kalashnikov assault rifles accounting for 80-90% of the volume.

Kalashnikov producer Izhmash said that Russia accounts for only 10-12% of the million Kalashnikov rifles sold globally every year, with the rest being unlicensed copies.

It said there is no single licensing agreement conforming to international legal norms that specifically protects Russia's intellectual property rights in small arms and light weapons production.

Almost half of all NATO member countries have yet to sign intellectual property rights protection agreements with Russia, including Lithuania, Latvia, Canada, Iceland, Luxembourg, the Netherlands and Norway.