World Islamic Congress in Jerusalem, 1931
This article asks, why was there no Arab university in Mandatory Palestine (while there were two Jewish universities). Apparently, the colonial mentality of the British authorities who deemed the Palestinians yet another colonized people who had to be oppressed, while regarding the Zionist settlers as fellow colonialists, feared that such a university would enhance the Palestinian national movement. At the same time, Zionist pressure, British anti-Arab racism, and lack of resources also combined to undermine the emergence of a proper Palestinian higher education system.
According to Pappe's abstract, the main reason an Arab university was not established was British racism. Yet even he admits that the British allowed other Arab institutions of higher learning to be established in Palestine.
The truth is only partially mentioned in the article:
After the Buraq disturbances, some members of the Palestinian political leadership and most notably Mufti Hajj Amin al-Husayni attempted a different path. It was in the wake of the All-Islamic Congress convened in Jerusalem in 1931 that the real efforts to open such a university began in earnest in 1932. The coordinating committee of the All-Islamic Congress sent delegations to Egypt, Iraq, Afghanistan, and India for fundraising for an Islamic University in Jerusalem.
... [British] opposition was not the only reason that the idea of the Islamic university in Jerusalem petered out. Unfortunately, these fundraising missions, particularly the mufti’s long fundraising trip to Iraq and India in 1933, were not successful in raising the funds necessary to establish a university in Jerusalem. Nor was there enough interest among activists in convening a second congress in the city, and that led to the collapse of the organizational capacity of the World Islamic Congress by the end of 1934.48 Although the local press constantly mentioned the idea of reviving the university project and holding another congress in Jerusalem in the years that followed, those plans came to nothing and were soon forgotten. As mentioned, even after the mufti’s escape from Palestine in 1937, he was still involved in the efforts until 1940; soon after he also lost interest in the project.
The antisemitic Mufti of Jerusalem couldn't galvanize nearly enough interest in the Arab world to build the "Islamic University in Jerusalem." He couldn't raise the funds and he lost interest himself. It doesn't appear that British opposition had much if anything to do with this - the Mufti certainly didn't consider that an obstacle.
Which means that Pappe is not telling the truth.
Other sources fill in more gaps. Pappe touches on this, but this article notes Egyptian opposition to the university:
The news that the [Islamic] conference would support the creation of an Islamic university in Jerusalem was seen as a direct threat to the dominating status of al-Azhar as the most prestigious university in the Islamic world. Thus, for example, Muhammad Bakhit, former Mufti of Egypt, in his public statement against the conference, also criticised the 'dreams' of those who pretended to establish a new university which would become the new scientific centre of the Muslim world. The loud opposition of al-Azhar to the conference must have also affected the cautious reaction of the opposition parties in Egypt. Although they might have been eager to use it as a stage to attack Sidqi's regime, Wafdist and Liberal leaders, being Egyptian nationalists, could not accept the eventuality that a non-Egyptian caliph would be nominated at the conference. Similarly, these leaders opposed any alleged attempt to erode the prestige of al-Azhar as the most respected centre of Islamic teaching. Even Egyptian advocates of the Palestinian Arab cause, such as Muhammad Ali Alluba and Ahmad Zaki, called for its postponement.
The entire purpose of the university was to help the Mufti's power base as well as to oppose the Hebrew University of Jerusalem, which had attracted prestige very quickly. But it was also a means to make land unavailable for Jews to buy, as Pappe notes:
Some funding did come through. The nizam (ruler) of Hyderabad donated one million rupees. ...That sum of money was used to buy land in the Tulkarm district that was endowed as a waqf for the future university. At least in this respect, the mufti could have been satisfied; he prevented the sale of the land coveted by the Zionist movement and ensured a future investment for the university. Alas, it was a short-lived victory as the village (Raml Zayta/Khirbat Qazaza) was destroyed in 1948 and on its ruins Jewish settlements were built and the university was not established.This nexus between endowment, struggling against Zionist purchase of land, and the university enthused also Christian activists in the national movement. Members of the Christian Orthodox community were prepared to do more than send words of congratulations. Most notable in this respect was ‘Isa al-‘Isa, the editor of Filastin, who sent the World Islamic Congress a proposal outlining a scheme for saving Palestinian lands from the Zionists by creating endowments on the coveted land...
The proposed Islamic University of Jerusalem was not conceived as a positive way for Palestinian Arab youth to improve themselves, but as a way to counter Jewish progress.
As with Palestinian nationalism itself, it wasn't pro-Palestinian. It was anti-Jew.