The agreement to set up the Red Sea Institute of Cinematic Arts (RSICA) in the resort of Aqaba was signed in New York this week during a ceremony attended by Jordan's King Abdullah, the university said in a statement.

US filmmaker Steven Spielberg encouraged the Jordanian monarch to use the School of Cinematic Arts at the university, of which he is a trustee, to set up the project.

"When His Majesty the King approached me on the subject of a Jordan-based, world-class film school serving every country in the  Middle East, including Israel, I immediately saw the importance and  significance of such a venture for the people and the future of the  region," Spielberg was quoted as saying.

Cultural richness

Jordan and Egypt are the only Arab countries to have signed peace deals with Israel.

Samer Moasher of Jordan's Royal Film Commission, which will contribute to the project, said the scheme described the the Middle East as, "a melting pot of cultural richness and diversity with  story-telling traditions as old as time".

"Yet contemporary cinematic stories from the region are in short supply," the statement quoted Moasher as saying.

Construction of the film institute is expected to begin in early  2007 and enrolment will begin in September 2008.