There’s a deeper problem. Dubai prospered as a kind of Switzerland in the Gulf, a place to do business walled off from the often violent rivalries of the Middle East, says Jim Krane, author of the 2009 book “City of Gold: Dubai and the Dream of Capitalism.’’

Now the state that Dubai is part of, the United Arab Emirates, has become an active player in those conflicts, fighting in civil wars from Libya to Yemen and joining the Saudi-led boycott of Qatar.

“It’s a situation that Dubai finds itself in mostly through no fault of its own,’’ says Krane. “You can go to war with your neighbors, or you can trade with them. It’s really hard to do both.’’

‘Unpleasant Surprise’

Stories of Qatari citizens being ordered to leave the U.A.E. shocked businesses that serviced the region from headquarters in Dubai. American executives were especially concerned about the prospect of being forced to pick sides, says Barbara Leaf, who was U.S. ambassador in the U.A.E. until March.

“It has cast a shadow,’’ she says. “It was a very unpleasant surprise when U.A.E.-based companies found out they could no longer fly or ship goods directly to Doha.’’ The dispute rumbles on, even though the U.S. is applying renewed pressure for a settlement.n

Investors are rightly worried, says Krane. Governments “shouldn’t be able to access accounts in other countries based on a simple request.’’That’s not the only blowback from siding with the Saudis. When Crown Prince Mohammed Bin Salman rounded up dozens of leading Saudi royals and businessmen at the Ritz-Carlton hotel in a supposed crackdown on corruption, the U.A.E. central bank asked the country’s financial institutions to provide information on the accounts of some of those held.

Preeminent, But Pricey

Dubai also faces consequences of its own success. Lacking energy resources of its own, the city had little choice but to build a non-oil economy. The 2014 crash jolted other Gulf countries into following suit. They’re all planning for a post-crude era, and trying to emulate their thriving neighbor by marketing their own capitals as regional hubs.

Dubai remains preeminent in that role. But it’s an increasingly high-cost base. In 2013, it ranked as the 90th most expensive place for expats to live, according to New York-based consultant Mercer. It’s now vaulted to 26th on the list.

It was the cost of living that persuaded Donovan Schram, a 38-year-old bond trader, to call time on his eight years in Dubai a few months ago. He’d already moved his wife and children back to his native Cape Town in 2014, after being forced to take a salary cut in a new job, and now he’s followed them.

“Dubai is very expensive when you have a family,” and there’s “a culture of paying upfront for everything from rent to school,’’ says Schram. He says at least three friends have made a similar decision.

‘A Big Drag’

Jobs became scarcer after companies from financial services to retail and energy enacted “massive layoffs’’ in 2015 and 2016 as profits slumped, says Nuno Gomes, head of Middle East business at Mercer. When the consultant surveyed 500 firms two years later, it found that half of them have no plans to boost hiring and don’t expect growth to return to 2013 levels.

Fahad Al Gergawi, head of investment agency Dubai FDI, says the city’s seen lean times before — and bounced back. “This is a market cycle that we have to accept,” he says. The government is doing what it did in past slumps, says Al Gergawi: sitting down with business to figure out solutions. “It’s about how you become creative.”

When the upturn does arrive, Dubai’s companies will emerge leaner and more competitive, according to Khatija Haque, head of regional research at local lender Emirates NBD. Meanwhile, many areas of the economy are holding up fairly well, she says.

The big problem is in wholesale and retail trade. “It’s a third of the economy, basically flatlining over the past two years, which is a big drag,’’ says Haque, who thinks government spending may have to fill the gap.

The government of neighboring Abu Dhabi has promised almost $14 billion of stimulus over three years. Sheikh Mohammed in Dubai, after his meeting with the fretful bosses, is working on a raft of measures that should help: Freezing school charges, relaxing curbs on foreign ownership of business, and scrapping billions of dollars of government fees. The visa regime is also being loosened, to make it easier for expatriates — 80 percent of the population -– to come, stay longer, and spend more.

‘Should Know Better’

One thing the government isn’t doing is reining in the builders. That’s a mistake, according to Craig Plumb, head of Middle East research at broker Jones Lang Lasalle.

Prices and rents are plunging across the board, as new capacity outpaces population growth and consumer spending.

Authorities are reluctant to stabilize the market by restricting permits, because land sales are a source of revenue. Retail space will expand 50 percent in the next three years, according to real estate adviser CBRE Inc.

Plumb says it’s not really needed — and he says some of Dubai’s premium builders are to blame. “We’re not talking about Mickey Mouse second-tier developers,’’ he says, citing state-run firms like Emaar and Nakheel PJSC. “They’re all established companies, and they should know better.’’

Government, builders and business alike are all looking to one event on the horizon that may come to the rescue.

Dubai will host the World Expo fair in 2020. Meant to showcase the city’s future prospects, it’s become almost an end in itself, a reason to keep the cranes at work. “The biggest saving grace,’’ Haque calls it.