The Aga Khan University is to open an institute dedicated to the study of Islamic civilisations in an attempt to counter prejudice in the face of the spread of fundamentalism.

The institute, to be based in the west, is part of the Pakistan-based university's plan to become international, with outposts in Canada, East Africa and elswhere.

Opened ten years ago in Karachi with a personal endowment from the Aga Khan, who is its chancellor and spiritual leader of the world's Ismaili community, the private university has established itself as a teaching hospital offering first world health care in a third world country.

It has also led to the introduction of degree-level nurse education in Pakistan and has launched a school-based in-service teacher education programme to improve standards in the country's schools.

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Speaking at the institution's tenth anniversary convocation, the Aga Khan recalled the role of Islamic scholars in developing medieval universities from Cairo to Andalusia. But he added: "Activist Islamic movements have voiced their principled opposition to the western world, its values and personal behaviour. The antipathy of militant Islamic movements to forms of government in Moslem countries built on western models has been profound. But the need for enlightened expression of what it means to be a Moslem in the 21st century will be, if anything, increased.

"A Moslem university could usefully counter some of the stymieing tendencies that have appeared in the last years by emphasising more enlightened and tolerant conceptions that from our beginning have been mainsprings of Moslem culture and world outlook."

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A commission set up by the Aga Khan to examine how the university should develop over the next 25 years recommended siting an institute in a western capital as a priority. London is a possible location.