Israel proposes freight rail link to Jordan, Saudi Arabia

* Minister: U.S. has expressed enthusiasm for project

* Israel sees rail link as boosting economic growth

* Says Palestinians would benefit from export boost

JERUSALEM, April 5 (Reuters) - Israel’s transport minister proposed on Wednesday linking its freight railway network with Jordan and Saudi Arabia and said he presented the idea to U.S. President Donald Trump’s Middle East envoy last month.

Under the proposal, goods could travel by rail from Israel’s Mediterranean port of Haifa through Jordan to Saudi Arabia’s Gulf port of Dammam via Jordan.

The minister, Yisrael Katz, declined as a news conference to say whether Arab states had agreed to join his initiative.

After Syria’s civil war began in 2011, Israel opened its Haifa port as a conduit for goods coming from Turkey and Europe to be trucked to Arab countries further east, but traffic has been limited due to small capacity and political opposition.

A railway connection would formalise links across tense borders. Israel, which has fought three wars with its Arab neighbours, has peace treaties with Egypt and Jordan, but not with Saudi Arabia.

Katz, a member of Prime Minister Benjamin Netanyahu’s right-wing Likud party, told reporters that Trump envoy Jason Greenblatt expressed enthusiasm about the plan when it was presented to him during his regional visit.

“I have already started working ... I am in touch with very senior elements in the U.S. administration,” said Katz, who has said he intends to eventually succeed Netanyahu as Likud leader.

Katz said he did not believe a rail route would make a serious dent in the high volume of commercial traffic through Egypt’s Suez canal linking the Mediterranean to the Red Sea.

Israel has set its sights on normalising relations with Saudi Arabia and other Gulf Arab states that Israeli leaders say share Israel’s concerns about regional rival Iran.

Katz said his plan could also give the Palestinians far greater ability to export goods from the occupied West Bank to the Arab world. Palestinians say Israel’s control of that border has limited their trade prospects.

In outlining the plan for the rail network, Katz said only a short length of track was still needed to link Israel and the northern West Bank near a Jordan River crossing with Jordan.

“If the Palestinians connect to a railway system, the entire area will get a significant economic boost,” he said.

Jordanian officials were not immediately available for a comment on the proposal.

Katz, who has held the transportation portfolio under Netanyahu since 2009, has proposed building an island off the coast of the Hamas Islamist-run Gaza Strip that would house an airport and sea port to serve the Palestinians.

Israel maintains a naval blockade of the Gaza Strip, citing security concerns, and tightly regulates the overland passage of goods and people through its border with the territory.

Egypt, at odds with Hamas, keeps its frontier with the enclave largely closed. (Editing by Jeffrey Heller and Tom Heneghan)