The skills set Russians acquired while building rockets earned them Yandex.

Why was Eric Schmidt in Turkey? I believe he was in Turkey not for Turkey. He was here to protect the dominance of Google, of which he is the CEO. Against what did he want to protect Google? Russia's Yandex has developed to rival Google. What is the benefit of this to Turkey? It has a limited range of benefits. Why? The deal here is the "they are partners, we are just a market," case as highlighted by former Prime Minister Erbakan, who died in February. He is still right. Let me tell you why this is so and why Turkey has a difficult task ahead of it.

Yandex is a Russian search engine. As the Internet network coverage in Russia has expanded and Russians have started to spend more time online, the Internet advertisement cake has grown and the profits of Yandex have increased. The company currently holds 69 percent of the market in Russia. Markets are closely monitoring whether the Yandex will open up to the world. Turkey is one of the markets in which the rapid penetration of the Yandex can be observed, analysts report. However, Google has an overwhelming dominance in the Turkish market, with 97 percent. Eric Schmidt's visit to Turkey is like that of a commander controlling his fortifications before a battle. At least this is what I thought and what an article in the daily newspaper Sabah maintained.

Now let me draw a couple of conclusions from these bits of information. First, Turkey lags behind in the field of data processing. Russia has Yandex, but Turkey does not. Yandex is a strong rival to Google in the Russian market whereas the latter has a silent dominance in Turkey. Why is the generation of  local Internet content widespread in Korea, China, India, and Russia, but limited in Turkey? Google, which entered Turkey in Turkish, also entered Russia in Russian, but encountered strong local resistance from Yandex. Here in Turkey, there is no resistance but surrender. Why? This is the first issue that sticks in our mind.

Recently I grouped countries in two categories: those through which a global value chain passes and those through which a global value chain does not pass.  Do you remember? Also, I added "Becoming a country through which a global value chain passes is harder than becoming a country through which a pipeline does." This dilemma needs to be clarified. As seen in the case with Google, the global giants of the new technology come to Turkey only because they consider Turkey a huge "market." They do not consider Turkey as a pool of skills and opportunities which could contribute via production to their global value chains. They visit Turkey only to sell their products. Turkey, therefore, has failed to integrate into the global value chains but has become an indispensible part of them. Why?

Russian president-to-be Vladimir Putin recently explained why. In response to hotel owners who were complaining that they could not compete with Turkey and that the tourism industry in Russia was lagging behind, he said, "While the Turks were building  hotels, we were building rockets." This is one of the main reasons why Russia has Yandex and Turkey has no alternative Turkish product to rival Google. The skills set Russians acquired while building rockets earned them Yandex. The deindustrialization process in Turkey, which has deepened ever further in the last eight years, has the potential to bar Turkey from the field of new technology even further. This is the second point to stress. Hopes in this regard depend on the newly established Ministry of Industry and Technology. Let's wait and see.

A FOOTNOTE ON THE CBRT DECISION

By the way, Turkey's problem is not only medium term but also short term. Some time ago, I said, "macroeconomic instability is no longer an issue in Turkey." I was sadly incorrect. The old bad habits have risen from the grave. Once again the politics have started to rule the daily economic decisions. What we thought to be impossible has become possible again.

The Banking Regulation and Supervision Agency has taken a partial step towards discouraging lending by banks in order to ensure macroeconomic stability. This latest decision is like trying to extinguish a forest fire with a water pistol. Life is the compilation of preferences. The economic administrators either will extend the precaution process in time and thus increasingly lose credibility and make both their and our lives more difficult, or rebuild their rapidly evaporating credibility by introducing effective and serious decisions in the short term. The Central Bank of Turkey chose the first option with its decision yesterday. It made a mistake. It will learn the lesson.

This commentary was published in Radikal daily on 24.06.2011