Wisdom after the non-event

New Year's Eve was spectacular. Vast crowds partying by the water's edge, music blaring as champagne flowed and a firework display that could have been seen from outer space.

Lucky me, I was in Sydney to welcome 2009 in style. In Dubai, though, similarly lavish celebrations were cancelled at the last minute when the city's ruler, Sheikh Mohammed, said partying was inappropriate as fighting raged in Gaza.

It was a worthy gesture, welcomed by some. But it drove home a worrying contradiction for Dubai's business community, particularly those investing and working in leisure and tourism. Dubai embraces and encourages Western entertainment – except when it doesn't.

The cancellation of New Year's Eve continues a long tradition of pulling the plug on festivities that are the lifeblood of some firms. The motives are always admirable — the death of a sheikh is indeed a sad occasion, and many people choose to mourn. But that doesn't compensate Dubai-based companies that can lose small fortunes overnight.

Take the UK expat I know who runs an events company, who says the cost of cancellations can be enormous. He still has to pay the band/comedians/magicians he's flown in from London, and refund every penny in ticket sales.

The ripples can be felt elsewhere in the city's hotel industry. Will that group of Glaswegians come back next year for Hogmanay? Nae likely.

By and large, Dubai makes a good fist of balancing its Muslim Arab roots with its new role as a modern, global city. Sometimes, though, they collide. On the website of its flagship financial centre, officials describe Dubai as "one of the world's most prominent centres for business and leisure". Chatting this week with international bankers who were lured to Dubai by promises of the latter, some feel it has been broken.

* Ratings agency Moody's confirmed its "very high" Aa2 sovereign rating on the UAE economy. Analyst Tristan Cooper said sovereign wealth funds in the capital Abu Dhabi hold well over $280 billion, even after steep falls in asset prices last year. As such, the government is well placed to keep the economy ticking over.

* One positive from Dubai's economic slowdown: banishing rampant inflation. Having been in double digits for the past three years, mounting evidence points to a reverse in 2009. Landlords are cutting some apartment rates by 20%, with the government pressuring shops, hotels and restaurants to follow suit.