It pulls out of Baghdad Central station on the stroke of 9.00am — a tiny train loaded with great symbolic freight.

It consists of nothing more than a locomotive, three rickety old carriages and a goods van, and, on this particular morning, only 20 passengers. But what matters is that a rudimentary service to Basra, abandoned as Iraq was engulfed by violence, is finally up and running again.

Indeed, this is the first passenger service to resume anywhere in Iraq after the horrors of recent years, and its resumption is one of those telling little indicators that suggest the country might have turned a corner.

For the past few weeks, with little advertisement, the train has departed for Basra each morning just as another completes the overnight return journey to Baghdad. Each carries armed guards. The 310-mile (500km)journey takes them 12 hours because the line is in such terrible condition. And with tickets costing only $4 (£2), or $8 for a couchette, the service loses a hefty amount of money each day — but that is not the point.

“Even if it's full it's not economical. It's not about making money. It's about helping our nation, helping our people,” Muhammad Ali Hashim, general manager of Iraqi Republic Railways, told The Times with manifest pride. “It's a milestone. It's a great thing,” said Mick Omun, an American official who is co-ordinating US and Iraqi efforts to rebuild the network.

“We were delighted when we heard that the train was working again. We felt really happy,” said Nouria Kareem, a middle-aged woman in a black abaya who was travelling back to Basra with her daughter and grandchild after visiting relatives in Baghdad. Mrs Kareem fled the capital 18 months ago after her husband was killed by a roadside bomb and Sunni militias threatened her with death.

Other passengers in the grimy 23-year-old French-made coaches, with their cracked windows, tatty seats and patched-up bodywork, included three workers heading for the southern oilfields, an army colonel reporting for duty in Basra, and Bassim Juma, 39, who was returning home with his family after attending a funeral in Baghdad. “It makes me feel that life is returning to normal,” Mr Juma said with a broad smile. “It's cheaper and safer than the roads, and better for the children.”

Even the train drivers are thrilled. “We feel like we're living again,” said Saoud Aziz, 47, whose father and grandfather worked on the railways and who was actually born in Basra station when his mother went into premature labour.

Iraq once had a fine and extensive railway network, boasting 1,300 miles of lines connecting Baghdad to Basra in the south, to Kirkuk and Mosul in the north, and to al-Qaim and Akashat in the west. Beneath an impressive rotunda and glittering chandelier in the marbled grandeur of Baghdad Central's foyer there are still signs advertising trains to Syria and Turkey above the locked-up ticket counters.

The service to Istanbul ended with the start of the Iran-Iraq war in 1980, however, and by the time of the US-led invasion of 2003 the domestic network was seizing up, starved of spare parts by years of international sanctions. The invasion and its anarchic aftermath all but killed it off.

Baghdad Central, built by the British in 1953, was looted so thoroughly that little but the chandelier survived. “They couldn't reach it,” said Mr Hashim, who has worked for the railways for 25 of his 53 years and admits that he wept at the damage. Stations across the country were destroyed either by insurgents or by coalition troops chasing insurgents. Bridges were blown up or, in one case, destroyed by burning oil from a ruptured pipeline. Near Ramadi US soldiers tore up nearly two miles of line to clear a road for their vehicles. Lengths of track were stolen for scrap. The signalling system was plundered for every last inch of wiring. Mr Omun laughed when asked how much of that system survives. “It is non-existent,” he replied.

Trains were bombed and shot at, employees killed and kidnapped. Many of the 12,000 workforce fled to avoid the sectarian bloodbath. Alaa Aldin al-Khanaq, the IRR Director-General, survived two attempted assassinations and a kidnapping, but was shot in both legs and crippled in June 2005. In the face of this rising mayhem the lines were closed, one by one, until by the summer of 2006 scarcely a single passenger train still ran.

Today — except for the hour between 8am and 9am, when the Basra train arrives and Baghdad train departs — the capital's once bustling, green-domed Central Station is a forlorn place despite a $5million US financed refurbishment. Its car park is empty, eight platforms deserted and waiting rooms closed. Occasionally, a dog lopes through the echoing halls. Saddam Hussein's personal carriages stand alongside Platform 8, long since stripped of their gold and silver fittings.

Two miles away more than 200 carriages rust in an overgrown marshalling yard, ghost trains whose windows have been smashed, doors pulled off and seats ripped out. Mr Omun reckons that only 20 per cent of the IRR's rolling stock and fewer than 60 of its 225 locomotives — mostly Chinese or Russian — are still functional. “The rest are junk,” he said. He added that only 2,000 of the IRR's 12,000 employees are still working, though Mr Hashim said that they are almost all still on the payroll. Asked what they do, he replied: “They are waiting.”

To revive the Baghdad to Basra service the IRR resurrected ten carriages, largely by cannibalising the derelict ones, and rebuilt a bridge at Latafiyah, a town in the infamous “Triangle of Death” south of Baghdad, that had been repeatedly blown up. Reopening the line cost $15 million.

It is still a dangerous journey, however. The risk of kidnapping remains too great for a Western reporter to attempt it. In places the line is so fragile that the trains must slow to less than 10mph (16km/h). Another hazard is the Iraqi habit of driving cars along the track. A week after the service resumed on December 16 one of the trains rammed into a vehicle near the town of Hilla, killing twelve people, ten of them children. But the trains have not yet been attacked, the Latafiyah bridge still stands and Mr Omun is now working to restore freight lines elsewhere to transport the oil, sand, rock and cement essential for the reconstruction of Iraq.

“Railroads are essential for reconstruction. Our focus is on infrastructure building before we do any more passenger lines,” Mr Omun said, arguing that trains are much safer and far cheaper than moving goods along checkpoint-littered, bandit-infested, bomb-pocked roads using Iraq's deeply corrupt trucking industry. He responded cautiously when asked how long it would be before the network was fully operational again: “In five years I see a railroad that is somewhat functional throughout the country in some capacity.”

Mr Hashim has altogether loftier goals. He believes that he can restore passenger services to Mosul, Ramadi and al-Qaim within the next six months, but that is just the start. Standing in his office in Bagdad Central, he pulled out plans for a brand new railway line that would encircle the capital, a Japanese-style high-speed line from Iran to the Syrian border near Turkey that would link Europe and Asia, and even a Baghdad monorail. “All this can be done within ten years,” he insisted. “If there's the budget, it can be done in five.”

Mr Hashim may lack locomotives, carriages, bridges and stations, but nobody could accuse him of lacking vision or ambition.

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