I followed in horror last week as the international media continuously featured Dubai in their headlines on television and online. It was not good news. Markets from Mexico and Brazil, Germany and the UK as well as Australia have all been affected by the announcement that Nakheel, the property arm of Dubai World, is seeking to defer repayment of a $3.5bn (€2.3bn, ￡2.1bn) bond due in December. The impact of the financial crisis on Dubai has been felt around the world at the highest levels.

It is already clear that Dubai's future is not what it used to be. But that does not necessarily mean it is facing a bad future. Last Wednesday's convulsion marked a significant milestone in the financial history of the emirate, and a very different Dubai will now take shape. To overcome the present situation, hard decisions must be made. But the good news is that no other city in the Middle East today even comes close to Dubai in terms of infrastructure and logistics.

Dubai World's request for a debt “standstill” should not be seen as a shock. In fact it is surprising that it took so long for it to happen. The government-owned conglomerate did wonders by expanding its port operations across the globe, eventually turning it into the fourth largest operator in a world where 90 per cent of trade is conducted via cargo shipping. But mistakes were also made.