"Just look around you," urges Dubai International Film Festival (Diff) chairman Abdulhamid Juma, gesturing from the window of his office in the glass-and-steel business district known as Dubai Media City. "Dubai is hungry for new things."

It is the middle of Ramadan, the Islamic holy month of fasting. Arguably, Dubai should be just plain hungry, yet all around there is the buzz of activity. Cranes lurch, TV executives shake hands in the street below and, here at the festival headquarters, staff prepare to roll out the red carpet for the landmark fifth edition of the Dubai festival (December 11-18).

Dubai first developed an appetite for a film festival in the late 1990s. "There was something in the air," recalls Juma. "We knew the city was crying out for a cultural event, something distinct from the tourism and the feats of construction for which we were famous."

Then in 2001 there was the establishment of Media City, a tax-free zone equipped with the infrastructure to facilitate broadcasting, publishing and advertising: "Through this, we were introduced to the amazing possibilities of film," says Juma, "and we liked what we saw."

But it was another event that year that transformed the idea of a festival into a reality.

"Ultimately it was the tragedy of 9/11 which really triggered the film festival in Dubai," says Juma. "It prompted us to decide, as a city which is already home to people of 200 different nationalities, to help close the gap between East and West. We'd done it with trade and in business, why shouldn't we do it with culture'"

And so in 2004, Diff, with its slogan, 'Bridging cultures, meeting minds', was born.

Fast forward to 2007, and that sentiment was being echoed by George Clooney, whose participation in the fourth edition of Diff signified, for many, the point at which Hollywood and Dubai really started to communicate. "We have to get to the point where we understand each other a bit more, and art is a great way of doing that," said Clooney at the Dubai press conference for Michael Clayton, which opened last year's festival.

In the course of its short but frenetic history, Diff has been navigating the line between creating this kind of celebrity photo opportunity and providing opportunities for its own local artists to step onto the world stage; between attracting foreign resources and enabling the amplification of local voices.

But, in a place like Dubai, where the vast majority of residents are from overseas, how does one even make sense of terms like 'local''

Juma argues that, because of the inclusive nature of Dubai, his is the only authentically pan-Arab film festival. "There is no other festival in the world today which offers visitors such a diversity of Arab cinema," he claims. "If you look at the other main film festivals in the Arab world, you won't find cinema from elsewhere in the Arab world. Cairo is an international film festival that has been running for 32 years, but its stated aim is to promote Egyptian output. At the Marrakech International Film Festival, you will see only North African and French-language titles. Syria, meanwhile, because of its political situation, is not very open to films from elsewhere.

"What I love about Dubai," he continues, "is that we turn a challenge into an opportunity. Because we have no great personal history of film-making, we have been free to become a showcase for the Arab world. When the programmers from the Tribeca Film Festival told me they had selected three Arab films, Captain Abu Raed from Jordan; Whatever Lola Wants, which was filmed in Morocco; and Paradise Now (from Palestine) from the (2007) Diff programme to screen at Tribeca (earlier this year), that was the most beautiful thing for me to hear."

For Juma, the 'bridge' of Diff's motto is a two-way structure, and the festival has given many Arabs their first taste of a Western cinema distinct from the mainstream fare of Dubai's mega-malls.

"Now we're getting to see independents which explore a more personal side of American life, for example. It has been a great vehicle for cultural understanding."

The festival's artistic director Masoud Amralla Al Ali, on board since the very beginning, cites Diff 2007 as the point at which, for him, everything fell into place. "Last year we became a real festival with a workable strategy for developing the industry. We launched Dubai Film Connection, the United Arab Emirates' first film co-production initiative. We hosted 11 world premieres in the Arab film section, which is at the core of what we do. Star-powered red-carpet glamour is all very well, and it's in Dubai's nature to put on a great show. Going forward, though, I want Diff to be first and foremost a place for discoveries, where we can all learn more about unknown cinema."

And as Wall Street financiers pull back from film investments, Hollywood is starting to look to Middle Eastern petrodollars. Diff is no longer just about a meeting of cultures, it is an increasingly important date on the international festival calendar as it provides a breeding ground for a new pool of film financiers.

It seems Diff has more than just a bright future - it is the future.