BAGHDAD, May 27 (Reuters) - Iraq launched a $17 billion project on Saturday to link a major commodities port on its southern coast by rail and roads to the border with Turkey, in a move designed to transform the country's economy after decades of war and crisis.

The Development Road aims to tie the Grand Faw Port in Iraq's oil-rich south to Turkey, turning the country into a transit hub by shortening travel time between Asia and Europe in a bid to rival the Suez Canal.

"The Development Road is not just a road to move goods or passengers. This road opens the door to development of vast areas of Iraq," Farhan al-Fartousi, director general of the General Company for Ports of Iraq, told Reuters.

Iraq's government envisions high-speed trains moving goods and passengers at up to 300 kilometres (186.41 miles) per hour, links to local industry hubs and an energy component that could include oil and gas pipelines.

It would mark a significant departure from the country's existing aged transport network.

Iraq's train service currently operates a handful of lines, including slow oil freight and a single overnight passenger train that trundles from Baghdad to Basra, taking 10 to 12 hours to cover 500 kilometres.

The Grand Faw Port, which was devised over a decade ago, is halfway to completion, Fartousi said.

Passenger transport between Iraq and Europe harkens back to grand plans at the turn of the 20th century to create a Baghdad to Berlin express.

"We will make this line active again and tie it to other countries," Fartousi said, noting plans to ferry tourists and pilgrims to Shiite holy sites in Iraq and Mecca in Saudi Arabia for the Haj pilgrimage.

The project was announced on Saturday at a conference aimed at courting Arab interest, including from Arab Gulf states, Syria and Jordan. A senior government aide said regional investment was on the table.

Promises of development are long-standing in Iraq but infrastructure remains decrepit even as the government of Prime Minister Mohammed Shia al-Sudani makes a push to rebuild roads and bridges.

But officials say the Development Road is based on something new: a period of relative stability since late last year that they hope can be maintained.

If work starts early next year, the project would be completed in 2029, Fartousi said.

"Even if Iraq was absent for a year or two or a decade or two, it must return one day or another. Hopefully these days are the beginning of the return of Iraq," he said.