New Delhi, March 5 -- It seemed too good to be true. In a region plagued by conflict, Dubai had the air of a place apart. It drew the well-heeled and economically footloose, to live, work and make money, or to enjoy shopping and sun. It became a global transport hub, linking east and west. It has used its wealth to join the artificial-intelligence race. Key to it all was keeping out of regional conflicts. Not even Hamas's attack on Israel in October 2023, the ensuing Gaza war or last year's 12-day fight between Iran and Israel did much to knock confidence.

Now Iran's retaliation against the American and Israeli attacks that began on February 28th has hit the heart of all this-and shaken Dubai's halo of safety. The Fairmont, a hotel on th...