"The current conditions are temporary and I hope this will be over soon," Emirati Finance Minister Sheikh Hamdan bin Rashid al-Maktoum said this week while opening the first phase of the 400-million-dollar Dubai Investments Park.

Crown Prince Sheikh Mohammed bin Rashid al-Maktoum, feted as the pioneer of many of the emirate's multi-million dollar projects, even summoned heads of consular missions to tell them Dubai had "economic, political and social stability."

"It's tough for hotels and airlines, and we're all hoping this dreadful war will be over as soon as possible," said Mike Simon, manager of corporate communications for the ambitious Dubai-based Emirates airline.

The government-owned carrier has played a key role in helping to pull in more visitors to the city-state in a bid to hold market share of around 2.5 million tourists a year.

Simon said Emirates was continuing to fly to all destinations including Kuwait, with only minor re-routing on some destinations such as Larnaca in Cyprus and Athens.

"There has been a fall off in passenger numbers from France, Germany and Japan. There has also been a slight downturn in numbers from Britain though figures for Easter look very healthy.

"But that is expected: it is a long, hard grind to say Dubai is a safe destination," Simon said.

The US and British embassies issued travel advisories in March warning of potential terrorist attacks against western targets in the city state.

Khalid bin Sulayem, head of Dubai's tourism board, stressed that the current political situation in the region was a "temporary passing phase, which will not affect the overall growth of tourism in the emirate."

Sulayem conceded that Dubai had not escaped the dip in hotel bookings that came as part of the "global ramifications" brought on by the war on Iraq.

Dubai, which already counts more than 280 hotels for a population of just under a million, welcomed 4.7 million hotel guests in 2002, according to Sulayem.

One hotelier, speaking on condition of anonymity, bluntly said: "Hotel occupancy rates are rubbish, even worse than after 9/11."

"It's got to the stage where hotels are less than 40 percent full and staff are being forced to take holidays," he said.

The multi-billion dollars projects unveiled over the last couple of years, however, continue unabated.

Saif al-Shamsi, commercial managing director of The Palm, a giant resort island reclaimed from Gulf waters off Dubai, said all plots were sold and there had been no comeback from buyers anxious about any fallout from the Iraq conflict.

"Demand far exceeded supply on the first palm. Reclamation on the second palm is continuing at full pace," Shamsi told AFP.

Geoff Rapp, spokesman for the Dubai International Financial Centre (DIFC), echoed a much-heard sentiment among local businessmen: "There are no significant change in plans. The general feeling is that it is a very unfortunate temporary glitch we hope will be over very soon."

DIFC is a multi-billion-dollar real estate development featuring a 50-storey headquarters and up to 14 other skyscrapers, aiming to corner a financial market that falls between East and West.

"Obviously the situation is far from ideal. But it has not changed the licencees' intention to set up shop in DIFC and the fundamental reasons for them wanting to be in Dubai have not altered," Rapp said.

Rapp added that institutions saw DIFC as being central to the multi-billion dollar restructuring and rebuilding of Iraq.

A post-war Iraq offers a "significant business opportunity for financing and projects. In terms of our plans, we must look to the future, and Iraq is expected to be part of that."

"Business is surprisingly not too bad. Everyone is looking to the future," a Western banker said.

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