For decades, Dubai has cultivated an image of being the safest haven for global capital in the Middle East and an emirate willing to embrace some, though not all, of the modern mores of Europe, China, and the United States. 

Home to a large Iranian diaspora and just a hopper flight away from the Iranian island of Kish, the city’s proximity to Iran is now complicating its image, new reports suggest. As Tehran continues to make retaliatory strikes on Sunni Gulf nations in response to ongoing U.S.-Israeli attacks, Dubai is gaining the unwanted air of volatility. 

Strikes landing in the UAE on Saturday hit Dubai International Airport, Fairmount The Palm hotel in the city’s wealthy Palm Jumeirah neighborhood, and the emirate’s iconic Burj Al Arab hotel, according to the BBC, which also noted a strike on Zayed International Airport in Abu Dhabi that killed one person. A social-media influencer in the city, Hofit Golan, was one of several to express shock and fear to BBC journalists. 

“We are not used to having missiles intercepted above your head,” the Israeli-Canadian told the news agency. “I saw missiles being intercepted and smoke on the Palm [building].”

UAE stock markets were closed on Monday and Tuesday, while tech outages following a hit to Amazon’s cloud computing facilities were affecting some banking operations, according to a person familiar with the situation who spoke with Reuters. Tens of thousands of people remained stranded as airspace across the region stayed largely closed, the news agency said. 

A source at a UAE-based mid-sized investment firm told Reuters the company had begun preemptively planning layoffs and halted fundraising. Demand for gold bars surged, according to a jewelry industry source cited by the news agency. International private banks that had been expanding in the emirate may reassess the scale of their presence, a private banker told Reuters, with some firms potentially reconsidering whether to serve clients locally or from elsewhere.

“It’s hard to overstate the peril for Dubai’s economic model,” Jim Krane, a fellow at Rice University’s Baker Institute, told the news outlet. He said the damage so far was largely psychological but warned that Dubai’s safe-haven status for expatriates and businesses was increasingly in doubt and that international capital is “highly mobile,” Reuters reported.

Governmental officials have tried to reassure residents and visitors that the country’s air defense system was among the best in the world, blasting down drones and missiles, the Associated Press reported. In a rare move, UAE President Sheikh Mohamed Bin Zayed strolled through the Dubai Mall, shaking hands with shoppers and attempting to reassure the public that they were safe, Bloomberg reported.

But for some, the impact of the attacks may outlast the conflict. 

“This is Dubai’s ultimate nightmare, as its very essence depended on being a safe oasis in a troubled region,” wrote Cinzia Bianco, an expert on the Persian Gulf at the European Council on Foreign Relations, in an X post cited by the AP. “There might be a way to be resilient, but there is no going back.”

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