The real magic of good storytelling

She slips into the Shelbourne, a tiny, elegant woman in her mid-50s, dressed in plain black with a vivid, red scarf

She slips into the Shelbourne, a tiny, elegant woman in her mid-50s, dressed in plain black with a vivid, red scarf. She has a large smile and her big, brown eyes are sparkling with energy. Isabel Allende has only half a day in Ireland on her five-month book tour to promote her new novel, Daughter of Fortune. But there are no airs or graces, even if she is South America's most famous woman writer and her books have been translated into 27 languages.

"I come from a tradition of oral storytelling. I love stories: To tell them, read them, hear them. I never forget a good story." Allende's passion began when she was a lonely, little rich girl who liked to lock herself in a cupboard to read A Thousand and One Nights, Scheherazade being an important early role model. Later, when she became a journalist, the Nobel-prize-winning Chilean poet, Pablo Neruda, told her she should put her inventive energy into fiction. She admits that during her career as a journalist she could not resist embroidering. She had the novelist's instinct for "the demented and the villainous, people tortured by obsessions, victims of the implacable mills of destiny". Anyone "intelligent or good" were, "from the narrative point of view, useless".

Just as, several centuries ago, the form of the novel began as a series of letters, so Allende's writing career evolved out of her letter-writing to her family. After the military coup in Chile in 1973, she moved to Venezuela. Separated from her adored grandfather, she began writing to him to assure him she had not forgotten the wonderful stories he had told her as a child, and the letters grew into her first, internationally acclaimed novel, The House of the Spirits (1985) (recently made into a film with Jeremy Irons and Meryl Streep). An autobiographical book, Paula (1994), is written in the form of a letter to her daughter who endured a slow, comatose death from porphyria, a little-known disease that led to medical bungling in a Madrid hospital. She still writes daily missives to her mother: "My relationship with my mother has been the longest love affair of my life. If I don't write to her every day it's like I've forgotten to brush my teeth."

While including some of her trademark ingredients - lush descriptions of food, a superstitious, Indian housekeeper full of herbal lore, and a heroine determined to find adventure - Daughter of Fortune is something of a departure, as it leaves the familiar stage of South America and evolves into a history of the city of San Francisco and the savage story of the gold rush in California. The book took seven years to research, including the intricate details of the spiritual beliefs and medical practices of the sympathetically drawn Chinese doctor, Tao Chi'en.

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"The gold rush was a time of scoundrels and bandits and madams, full of cruelty and violence, but also idealism," muses Allende. "It was a chance for people to re-invent themselves." Among the colourful cast of international characters who descend on San Francisco, Allende includes a real-life 19th century Irish courtesan, who went by the name of Lola Montez: "She was a beautiful woman, very courageous for her time. The King of Bavaria fell in love with her and she ruined him. She spent everything and died in poverty. What a way to live."

When I say that many Irish people don't even know of Lola Montez's existence, Allende's eyes go wide in amazement: "I thought she'd be a national hero." But there was the issue of Lola pretending to be a Spanish aristocrat: "That's right, she had navy blue eyes and black hair and she invented a `Spanish' dance that no one had ever seen in Spain."

Allende herself was intoxicated by a sense of liberation when she first visited San Francisco 12 years ago: "I felt free. No one knew me or cared who I was." She fell in love with Willie, an American lawyer, and has made the city her home ever since. It is a welcome contrast to the society of her native Chile: "I love Chile but I don't think I would have become a writer without getting away. In Chile the eccentric is not tolerated. The society is very Catholic and conservative, sober and sombre. There is still no divorce. You can't even mention the word abortion on TV. It's hard to be yourself. Whatever embarrassing thing you do will affect the honour of the family."

Allende's defiant spirit in such an atmosphere can be judged by the fact that, during her years as a journalist, while investigating a story about chorus girls, she posed as one herself and appeared scantily clad on TV.

Speaking of Chile, the inevitable name comes up, and Allende grows animated: "Pinochet's presidency is still overpowering. We've had 10 years of democracy in Chile, but it's still a tutored democracy. The press is still not allowed to say `the dictator, Pinochet', they have to call him `the general'." But what do people in Chile think of Pinochet now? "They are fed up with him, he's an embarrassment for the right, for the left, the military, everyone." She is pleased about the newly elected President Ricardo Lagos, Chile's first socialist president since Allende's uncle, Salvador Allende: "Lagos is a modern, knowledgable leader who will continue the economic progress Chile has made over the last 10 years. He will deal with the social injustice there which has not been addressed for 25 years. The gap between the rich and poor is appalling. The rich earn more than their equivalent in the US, while a Chilean worker earns 15 times less."

Allende grew up into a wealthy conservative family and had no particular political convictions until Pinochet's coup (vividly described in her second novel, Of Love and Shadows): "No-one could remain neutral after that. I was against the dictatorship and that has marked the second half of my life. I learned that brutality is in everyone, and will come out given the right circumstances." The corruption and inequality of South American society, she notes, creates an atmosphere of violence because, "when the huge majority have very little, you have to keep people quiet by repression. The armed forces become the mercenaries of the rich."

But what of the involvement of the US in these regimes? "The Americans would never tolerate in their own country the brutal regimes they support elsewhere. In America, there is a large, educated middle class, lucky enough to have been governed always by people with a democratic vision."

The coup was "awful": "Chile was highly politicised, with a freely elected government, and a well-educated population. It had the longest and most solid democracy in South America. In a matter of 24 hours we had torture chambers and concentration camps: a regime of terror to paralyse and control the people. On the first day men with beards were forcibly shaved and women not wearing skirts had their trousers slashed. We went suddenly from one extreme to the other.

"The three brief years of Allende's government had been a playful time, with a sense of youth and idealism. Economically and politically things were hard, but there was a renaissance in the arts." With a dramatic flourish that would sit well in one of her novels, she concludes: "It was a great and crazy time that ended suddenly with bullets."

Although South America is, in Allende's own words, a "macho society", her books are filled with powerful women: "South American women are resilient, well-organised and live longer than men. Sooner or later they get their own way." Her feminism means that she does not espouse any organised religion: "They all have a patriarchal structure and beliefs. Elderly males set up the rules and women are stupid enough to follow them."

As for literary influences, she grew up reading Gabriel Garcia Marquez, the inventor of magic realism, a genre into which Allende's work also falls. However, she does not appreciate being put into a literary category: "I don't see myself as part of any literary tradition. Writing is for me a way of sorting out the confusion of life. I use whatever style I need; every story has its own tone or colour.

"Magic realism seems to have passed as though it were a fad, but for me it is not so much a way of writing as a way of life. I believe in fate and I always expect the possibility of mystery. I know how messy life is, and if I open myself to that I am freer and richer."

Daughter of Fortune by Isabel Allende is published by HarperCollins, £16.99 in UK