To read Mario Vargas Llosa is to encounter a writer engaged in a complicated process of remaking the modern world in fiction. He is an undeviatingly serious writer, a visionary, whose novels are steeped in the darkness, the violence and the obsessions of his native Latin America. He speaks of the “passionate irrationalism of the Latin tradition” and of how fiction appeals to base instinct, to “the madness within”, to “the most remote and uncontrollable part of the personality”. His new novel, The Feast of the Goat, a fictional recreation of the last days of Rafael Trujillo, the despised dictator of the Dominican Republic who was murdered in a CIA plot in 1961, features some of the most harrowing torture scenes in contemporary fiction. It can be read more generally as a parable of the traumas of nation building throughout Latin America, with its dictatorships and disappearances, its fractured glamour and its passion.

All this may lead those who have not met Vargas Llosa, who is 66, to imagine that he is a kind of Nietzschean extremist, relentless, anti-social, solitary. He is nothing of the kind. In person, he is charming and urbane, an elegant, witty host, a candid anecdotist, and generous interviewee who - unusually for a major writer and one, at that, who ran for the presidency of Peru - is not a monolith of ego. He troubles to ask you questions about your own life and does not profess an omnipotence of knowledge. The writer and broadcaster Nicholas Shakespeare has known the Peruvian since 1981. “Maybe it’s because of the country he’s from that the boundary between public and private occurs in his life and that is the very thing observers remark on - how different the private Mario is from the public Mario,” he told me. “He’s highly amusing, well-informed, courteous and always his own man. I recall that once when Martha Gellhorn came to dinner with him at my flat in London, she expected to meet a Dostoevsky, a man of violence with a strong odour of madness: what she found was ‘a perfectly controlled, well-mannered, civilised man’ who ‘could be mistaken for almost anything except a writer’.”

For all his charm, however, Vargas Llosa arouses strong passions and even dislike among some of those who have known him, particularly in Latin America. In the sixties he was a vocal leftist, a leader of a communist cell at the university of San Marco in Lima, and a passionate supporter of Castro and the Cuban revolution. He became, like all leading Latin American writers, a political figure, a believer, as he still is, in the old 19th century notion of the writer as conscience of the nation. But his enthusiasm for Castro curdled into disappointment and then into violent revulsion: he became a man of the Right, an advocate of pluralism, free markets and social liberalism. He broke publicly with many of his old friends, including the Nobel laureate Gabriel Garcia Marquez, about whom he once wrote a book but whose support of Castro he condemned. Is it true he once punched Marquez? “What can I say about that?” he laughs. “We fell out not over literature, but over politics. In Latin America it’s difficult to separate political and personal differences, especially when politics is so often a matter of life and death.”

By 1990 Vargas Llosa was running for the presidency of Peru on a Thatcherite programme of privatization and free markets. I was warned in advance, by those who had been with Vargas Llosa during the election in Peru (which he lost in the second round to the then little-known, Japanese-Peruvian outsider Alberto Fujimori), that he would profess to having learnt much about himself and about politics and that he did not regret his defeat. “But he desperately wanted to win,” one of his friends told me. He certainly campaigned hard, travelling throughout Peru - rather than relying on the convenient reach of televised broadcasts - and often venturing into remote, guerilla-controlled territory at a time when the Sendero Luminoso (Shining Path) Maoist revolutionaries were at their most dangerous. “It was a mistake,” Vargas Llosa says, “The whole thing was a mistake, but an understandable mistake considering the state of Peru at the time. People came to me to ask me to run, it was an instinctive decision, but it was wrong of me. But I learnt a lot about myself, about Peru and about politics.” Ah, as good as the word of his friends, then.

We are sitting in his high-ceilinged, split-level Knightsbridge flat, from the windows of which you can see the vulgar shimmer of Harrods. Vargas Llosa is dressed in an immaculate open-necked yellow shirt and dark green cords. His thick grey hair is parted and brushed back from his smooth, tanned forehead. His accent is curious, not exactly Manuel from Fawlty Towers but certainly comic in its timbre and Hispanic extravagance. There is a wonderful hauteur about him, a superb worldliness, and indeed he describes himself not so much as a rootless cosmopolitan - as some do, disparagingly - but as a “citizen of the world”. He has homes in London, Madrid and Lima and an office in Washington, where he has a stipend from Georgetown University, teaching Hispano-American literature. “Mario loves to travel,” says Matthew Evans, chairman of Faber & Faber, which has published Vargas Llosa since 1984. “It suits his temperament, which is very smooth and urbane, but serious too. He moves in quite a social set, I think: you know, he’s the novelist to have to dinner if royalty are coming.”

Perhaps his very urbanity and worldliness contributed to his election defeat - because Vargas Llosa failed to reach the cholos the poor and dispossessed majority of Lima who live in shanty towns in the outer suburbs of a city that remains one of the most divided and dangerous in the world. “Mario looked like what he is, the privileged child of the Conquistador elite,” says one friend. “While, to be frank, Fujimori looked like an Inca. He appealed to the cholos.”

Vargas Llosa is thought to be close to the new president, Alejandro Toledo, whom he praises as a “democrat and reformer”. He has recently returned from a three-month stay in Lima, where he refused to return throughout most of Fujimori’s 10-year presidency. “Fujimori was a dictator,” he says, by way of explanation for his absence and for his decision to adopt Spanish nationality, which dismayed many Peruvians. “I was being attacked fiercely by the official media. It’s true that Fujimori reached out to the poor sectors of the electorate. He was also very clever in that he was prepared to lie. I wasn’t. I said exactly what I wanted to do: that my reforms would cost the nation but that we needed them if democracy was to flourish.”

Inside Peru attitudes towards Vargas Llosa remain mixed. “The consensus here is that Mario’s reaction to his defeat was all ego,” says the Lima-based entrepreneur Marisol Mosquera. “He was hurt and did nothing else for the next ten years but tarnish Peru’s image overseas. That triggered great resentment among the elite and the middle classes, including many people who had voted for him including myself. We felt betrayed by our leading international figure at a time when we needed international support more than ever. Vargas Llosa insulted the Peruvian nation by giving up his citizenship and saying that, if he dared to return, he would be put in prison and persecuted. This, of course, didn’t happen. He came several times for family reasons and moved freely.”

All of this is a long way from the Peru into which Vargas Llosa was born. In his essay “The Country of a Thousand Faces” he wrote nostalgically, even elegiacally, about his early childhood in the provincial city of Arequipa, in the southern Andean valley, where he was born and of the years he spent living as a pampered child in Cochabama, Bolivia, before returning at the age of 10 to Peru and to an adolescence isolated from the truth about the disturbed impoverishment of his polyglot, multi-ethnic homeland.

What he does not mention in that essay is how he grew up for a long time believing that his father was dead. In fact, his parents were divorced which, he thinks, explains the decision to move to Bolivia. “My maternal family was very traditional, Catholic. Divorce was a source of great shame: that’s why my mother would rather have said that my father was dead.” His parents later remarried; but Vargas Llosa never quite recovered from the shock of their reconciliation, nor ever felt any real affection or love for his father, whom he describes as a remote, authoritarian figure, a prototype of the more public dictators who feature so prominently in Latin American fiction. “My father was a self-made man and hostile to the idea of my becoming a writer,” he says, without rancour. “That’s why he sent me to a military school, to knock this nonsense out of me.”

Life at the military school was, however, broadly beneficial, because it was a microcosm of the real Peru, an institution where all classes and races mixed. It was there, too, that Vargas Llosa knew that he must continue to write, in defiance of his father. So literature became a refuge, a place of escape, fantasy and secrets, an instrument of resistance. “Looking back, my hatred of authoritarianism comes from my hatred of life under my father’s authority. You know, years later, when I was successful as a writer, my father wanted to establish a friendly relationship, but I was very reluctant ...” His voice trails away.

Perhaps because of the early influence of his mother, Vargas Llosa has always surrounded himself with strong, independent women. His second wife, Patricia, with whom he has three children, is described by a friend as “very tough and the one who keeps him on the straight and narrow”. His diminutive agent, Carmen Balcells is one of the most feared in the business. “She’s the Andrew Wylie of the Iberian peninsular, a ferocious advocate of her authors who sends a cold shiver down the spine of any respectable publisher,” says the writer and editor Robert McCrum.

When he was only 18, Vargas Llosa married another willful, independent woman. Julia, was 14 years his senior, and the sister of one of his uncles. The relationship informed his delightful and erotic semi-autobiographical comic novel, Aunt Julia and the Scriptwriter, which was about a young man’s secret affair with his aunt. Why did he marry so young? “Because I was in love,” he says, throwing his arms open with characteristic relish. “To have an affair with an older woman was very exciting. It was a wonderful experience and I learnt so much, not least because I had to grow up very quickly, to order my life in a certain way so as to find time for my writing.”

That may be so but surely early marriage was inimical to the bohemian life about which he has written so well: the longing for discovery and sexual adventure? “The bohemian life is not all that original. These things, these erotic experiences, they exist in the imagination.” He does not exactly wink after saying this, but merely chuckles conspiratorially - a kind of confession?

Vargas Llosa is a complex, unpredictable figure who enjoys dividing people. His new novel - full of violence, suffering and cruelty - offers a convincing portrait of the autocratic personality, in all its monstrosity and poignancy. It is told from three interconnecting points of view: that of the conspirators, whose initial exuberance at the assassination of Trujillo soon turns to terror and despair as they are tortured to the edge of lunacy; of the increasingly paranoid dictator himself; and of the 49-year-old New-York based lawyer, Urania Cabral, who returns to the Dominican Republic after a long absence to confront the truth about her mute, disabled father, a former Trujillo loyalist, and her own past as a teenage victim of the dictator’s lust for virgins. Vargos Llosa’s Trujillo is a barbarian but he is also capable of compassion and moments of unexpected self-revelation, never more so than when confronting his own bodily decay, his impotence and incontinence. He is, like his creator, at once beguiling and unforgettable. “What strikes me most about Mario is the stubbornness and courage with which he holds his opinions, sometimes in the face of all opposition, fashion and self-interest,” says Nicholas Shakespeare. “For much longer than was the case for anyone else, he thought Mrs Thatcher a marvel, for instance.”

Today Vargas Llosa has switched position again. He is a self-declared admirer of Tony Blair, whom he considers a good European and tireless internationalist. His old hero, Margaret Thatcher, disappointed him when she publicly supported General Pinochet after his arrest in Britain. “That was too much for me,” he says. “Thatcher now strikes me as a very bitter person, nationalistic in the worse sense and defensive. I find her affection for Pinochet intolerable.”

As ever, with Vargas Llosa, his hatred for authoritarianism and dictatorship remains the one true constant in his life, a source of broken friendships and tarnished reputations, and the inspiration for what may be his best novel. The authoritarian father who came back from the dead and opposed his son’s commitment to the writing life continues to inspire Vargas Llosa in ways he would never have understand.