The South Korean economy now faces ‘stagflation’ as annual inflation is expected to reach 5.5 percent, the highest in over a decade, while the Bank of Korea and the International Monetary Fund is projecting the nation to achieve just four percent GDP growth in 2008. This economic crises should be of the greatest concern for Koreans, whose incomes are failing to keep pace with soaring inflation.

Yet, the economic malaise has not been the issue gripping the attention of Koreans for the past few months. Instead, the nation has gone into a virtual frenzy over President Lee Myung-bak’s decision in April to permit U.S. beef imports into the country, which may persuade U.S. Congress to sign the South Korea-U.S. Free Trade Agreement (KORUS FTA).

President Lee’s policy stance sparked outrage amongst the populace, with fierce anti-American sentiments striking the country like a typhoon. In early May, thousands of activists began holding daily candlelight vigils to demonstrate against U.S. beef imports, which were banned in 2003 over fears of Mad Cow disease.

The national media ignited uproar by publishing outlandish articles and reporting on TV and radio that U.S. beef is unhealthy and dangerous to eat. Some reporters portrayed American cattle producers as participating in a conspiracy to inflict Mad Cow disease upon Koreans, since they are allegedly genetically more susceptible to the illness.

These arguments seem illogical, because American ranchers do not receive economic benefits by selling poisonous cattle - you can’t sell food to dead consumers. But many Korean protestors don’t take heed to logic, due to a notorious reputation for over-reacting to disputes, whether big or small ones.

These demonstrators have had a long history of immolating themselves, chopping-off their fingers, burning-down barricades, demolishing stores, committing suicides and fighting against riot police. They are re-enacting this behavior with the U.S. beef protests. More than 80,000 Koreans gathered for a candle-light vigil on June 10.

The incident forced President Lee to issue a public apology to the nation and all his Cabinet ministers offered to resign. The president unceremoniously sacked all of his top advisors, immediately afterwards. Mr. Lee, who is nicknamed, “The Bulldozer” was humbled by protestors , which were comprised of leftists organizations and politicians. His popularity ratings plummeted from 75.1% on February 23 to 17.2% on June 2, according to the Financial Times (FT).

Even though Mr. Lee apologized, the protestors continued with their onslaught of violent demonstrations, which culminated into a rally last Saturday, July 5, where approximately 500,000 stood in front of Seoul’s City Hall. Hence, Korea still maintains its image as a “country of protestors” incited by rabid nationalism.

Ironically, Koran protestors are making their patriotism look foolish, which is an unintended consequence. Whenever, the international media reports on South Korea, usually, scenes of violent protests are depicted.

Some Japanese and Chinese people may be laughing at their rivals asking: “Why must Koreans resort to acts of terrorism to complain about U.S. beef imports? Or Don’t they realize they’re self-destructing and harming their national economy?”

These are valid questions, since foreign investors have become more hesitant to do business here. South Korean Prime Minister Han Seung-soo made an accurate statement when he held a joint press conference with the United Nations Secretary-General Ban Ki-moon, a native South Korean, on Friday, July 4.

“The daily protests are making foreign investors avoid direct investment in Korea and also discouraging investment by domestic businesses,” P.M. Han said. “The credibility of South Korea’s economy is worsening rapidly.”

UN Secretary-General has expressed dismay over the enflamed passions of his fellow Koreans. He made a public statement to testify to the safety of U.S. beef and admitted to feeling a sense of “shame” at the demonstrators.

President Lee has re-launched efforts to restore stability in his nation. He gave a speech last week at the Seoul Gymnasium requesting that Koreans should put an end to the protests against U.S. beef imports. He suggests, instead, that they place a greater emphasis on the economy.

“We are facing dual challenges at home and abroad. Our law and order have been ignored and our economic difficulties have deepened,” Mr. Lee said. “We must wisely and squarely surmount these challenges.”

Mr. Lee has good reason to worry about the state of the economy. The FT reports that, “net foreign investment turned negative in the first quarter for the first time in two years, with $670m being withdrawn from Korea, according to the central bank. Business executives in Seoul express concern that Korea is heading in the wrong direction, and is becoming increasingly protectionist.”

The FT article on July 3 also stated that South Korea is too dependent on exports and the service economy is underdeveloped. Considering the importance of exports, the nation must do a better job of promoting KORUS FTA, or face dire consequences if the U.S. Congress votes against the trade agreement.

If South Korea wants to move forward and earn greater respect from the international community, than the culture of violent protests must come to a swift end.