ABU Dhabi is a city built on possibility and paradox. A bustling Middle Eastern metropolis where conservative cultural and Islamic traditions happily co-exist alongside closed-door libertarianism and untold wealth, the capital of the United Arab Emirates remains, like the desert that envelops it, a landscape forever evolving yet remaining the same.

But in Abu Dhabi, an emirate that has grown rich on its oil deposits, the sands are beginning to shift. In a tacit acknowledgment of the country's finite natural resources, art has been embraced as the new cultural currency, a government-driven leap towards a sustainable future economy.

And with the construction of the city's two ambitious international museums, the Frank Gehry-designed Guggenheim and the Jean Nouvel-designed Louvre, proceeding apace, Abu Dhabi is pulling out all stops in its quest to rival cities such as London, New York and Paris.

"We are truly at a crossroads of cultures, a crossroads of civilisations," says Zaki Anwar Nusseibeh, deputy chairman of the Abu Dhabi Authority for Culture & Heritage. "This is a vision that needs to work -- for the world, for us and the regional populations. For all."

Nusseibeh, himself an international art collector, was speaking at Abu Dhabi Art 2012, a boutique international fair held just a stone's throw from the gargantuan museum and cultural hub being constructed on Saadiyat Island, 500m off the emirate's coast.

The fair, featuring 50 galleries representing 400 artists from 20 countries, is unique in terms of both exclusivity and inclusivity: the New York and London-based Gagosian Gallery and London's Lisson Gallery exhibited alongside emerging Saudi gallery Athr; Picassos hung alongside the work of aspiring Iraqi painters; Damien Hirst skulls glimmered opposite the work of Emirati artist Abdul Qader al-Rais. The 2012 offering was the event's fourth instalment, held in the purpose-built Manarat al-Saadiyat exhibition centre and UAE Pavilion.

Although small, Abu Dhabi Art could not be accused of doing anything by halves. With a guest list to rival that of the world's biggest fairs -- Marina Abramovic, Anish Kapoor, Subodh Gupta, Bharti Kher and architects Gehry and Nouvel were among those holding public talks -- it offers an intimacy to which few other international events can aspire.

"Where else in the world could you see walk up and talk to Marina Abramovic, or stop Frank Gehry in a restaurant and ask him about his work?" says the art fair's senior manager Shen Po Chen. She says this year's event, which featured exhibitions and public art programs, showcased the emirate's new cultural dictum: to represent the art world, past and present, from a Middle Eastern perspective. It's an antidote "to some of the world's mega-fairs", Chen says. "It has a different feel. We really are in the middle of East and West."

Interest in art is relatively new in this region. Emiratis have a rich oral history and design aesthetic, but not a strong history of visual arts. As part of the government's 2030 diversification plan, art education programs are increasing at schools and universities. "We are really building from the ground up," Chen says. "It's a young market. This fair is really building the market to be ready for when the museums open. Things are happening very quickly."

All this movement in the Gulf coincides with the nascent Louvre and Guggenheim projects, as well as the Zayed National Museum, all funded by the Abu Dhabi Tourism & Culture Authority.

The projects are a huge undertaking. Once completed, the hub will be one of the largest cultural compounds in the world. Gehry's Guggenheim, a $200 million, 30,000sq m project, is scheduled for completion in 2017, while the opening of the $120m, 24,000sq m Louvre -- a structure that will hover over a yet-to-be-constructed canal -- has been pushed back from this year to 2015. The Zayed National Museum is expected to open in 2016.

But for all their fanfare and global interest, the two international projects, announced in 2006 and 2007 respectively, have been dogged by controversy and delay. Indeed in a city where towering skyscrapers seem to materialise overnight, the long-awaited cultural district has been an anomalous mirage on the landscape.

Initially victims of the global financial crisis, the projects have more recently been embroiled in human rights controversies. Last year, more than 100 international artists urged a boycott of the Guggenheim and Louvre projects, citing Human Rights Watch reports about violations of the rights of foreign construction workers. The reports revealed unsafe conditions for workers, whose wages and passports were being withheld to prevent them from leaving. Independent audits by PricewaterhouseCoopers say Abu Dhabi has cleaned up its act, but sources concede the emirate's glut of desperate foreign workers is a perfect breeding ground for exploitation.

Separately, protests have been held in Paris over Abu Dhabi's $525m, 30-year lease of the Louvre's brand; there were also vocal objections from artists to the UAE government's mandatory jailing of HIV victims.

It's a glaring reminder of the power wielded by the government, headed by UAE President Sheikh Khalifa bin Zayed al-Nahyan, who is Abu Dhabi's hereditary ruler. But while the emirate's strict cultural norms might be seen as an obstacle to a modern cultural institution, Guggenheim director Richard Armstrong disagrees. He says the country's leaders have had no influence over the museum's program of acquisition. Rather, it is the role of the museum to be aware of cultural sensitivities: "We have a consciousness of . . . being cautiously sensitive to the cultural norms of the area," he says.

It is a challenge with which Australian curator Suzanne Cotter is well acquainted. As head curator of the Abu Dhabi Guggenheim, she has since 2010 overseen a small team "developing the narrative" for the Middle Eastern arm of the contemporary museum.

"It's a very complicated process of consultation," says Cotter, who is leaving next March to take over as director at the Serralves Museum in Porto, Portugal. "It really is history in the making in this part of the world. It's a new frontier."

The only potential problem, according to Nusseibeh, is the seismic nature of the Gulf.

"The biggest fear we have here is that something will go wrong, regionally," he says. "That would be our biggest nightmare. It is something always on our minds."

Despite its geographical proximity to some of the world's most turbulent locales, Abu Dhabi's increasingly cosmopolitan face and its push for cultural cachet are helping to change perceptions of the Middle East.

The notion was best highlighted by one of the fair's main drawcards: Belgrade-born, New York-based performance artist Abramovic, who was visiting the Middle East for the first time. "I had a lot of preconceptions about this place, things I thought I knew about it," she says. "But here I met some amazing women artists. Of course they can't go into the street and perform. But they are doing performance art in their bathrooms. Restrictions don't have to be a bad thing. They inspire such work, such art."

For 27-year-old Saudi artist Nasser al-Salem, whose bright blue neon work God is Alive, He Shall Not Die attracted great interest during the fair, it is important to let the world about the growing art scene in the Middle East.

"People have this idea that nothing is happening in Saudi Arabia, but there are people making art," he says. "It's happening."

The sentiment is echoed by Moiz Zilberman from Turkey, who runs Cda-Projects Gallery in Istanbul. He says the push for a cultural legacy in the Gulf has inspired regional optimism.

"The interest in this (event) and in art in the Middle East is representative of a new hope for the region," he says.

"This region is changing. I see the light in the eyes of the young people. In the eyes of the artists. Perceptions are changing, people are opening their eyes to these new possibilities. And all through art. The sun, it is rising from the East again."