THE Nobel laureate Mario Vargas Llosa has some stern words of warning for Scotland's First Minister and the Scottish Government.

"When nationalism becomes power, it is always very negative, very pernicious," he says. "It produces a provincial vision of social and political problems."

Holyrood's campaign for independence may have won the backing of Hollywood actors but the celebrated Latin American author, who was awarded the Nobel Prize for Literature in 2010, is vehemently opposed to nationalism in all forms.

"The basic idea of nationalism is wrong," declares Vargas Llosa when we meet at his publisher's offices in London. "The idea that to be born in a given place is a value in itself is ridiculous. Totally ridiculous! Now the Scots want to be independent. That would be very sad. I don't think Scotland is going to be privileged by independence. On the contrary, this is not the march of time – the march of time is for the dissolution of frontiers, integration, common denominators.

"Nationalism appeals to the tribe, the basic primitive tribe. No, no, no, we must fight this – Scotland must fight this. But we must fight colonialism too," he says, adding that he is in favour of European union despite the current crisis. "We have had almost 60 years of peace in Europe for the first time in history, which is a great achievement. Never forget, nationalism has produced the most brutal and cruel wars in history."

Now 76-years-old – in his eighth decade he still has vestiges of his youthful matinee-idol good looks – Vargas Llosa is in London to promote his latest powerful novel, The Dream Of The Celt, a fictionalised biography of the Irish-born diplomat, poet and revolutionary Roger Casement, who remains one of Ireland's most contentious national heroes and who was executed for treason in 1916. "A tragic hero, a great fighter against the false mythology of colonisation," says Vargas Llosa.

His monumental book, in which narrative and chronology shift back and forth, is a journey into the heart of darkness of the rubber trade early last century when Casement, then British consul in the ivory-rich Congo, reported to the British Government how Belgian militia were routinely cutting the hands off "lazy" slaves and bagging them as hunting trophies, while a sliced-off penis was proof that a Congolese had been routinely killed. On a subsequent diplomatic posting to Amazonia, Casement discovered that the "monstrous" English rubber barons were also permitting rapes, floggings, mutilated limbs, castrations and live burnings.

The Dream Of The Celt – the title refers to an epic poem written by Casement as well as his dream of a free Ireland – opens in Pentonville Prison on the eve of Casement's hanging for high treason. The dedicated champion of oppressed peoples had plotted with German help to restore Irish independence and overthrow Ireland's colonial administration.

A homosexual, Casement's notorious, pornographic Black Diaries, which were released by the British in a propaganda exercise to forestall the petition to save his life, were often pure fantasy, says Vargas Llosa. "Apparently, he was a polite, very shy man yet these diaries are vulgar, obscene." In an epilogue to the novel, he writes: "My own impression – that of a novelist, obviously – is that Roger Casement wrote the famous diaries but did not live them, at least not integrally, that there is in them a good deal of exaggeration and fiction, that he wrote certain things because he would have liked to live them but couldn't."

"I am not writing hagiography," says Vargas Llosa. "This is not light literature, ephemeral entertainment. I want to write books that make people dissatisfied with the world as it is. The atrocities that occurred in the Congo, for instance, are still happening today in certain African states. Granted, things are better in Latin America, but if Casement were alive now, I believe he would be in Africa or the Middle East campaigning against the terrible abuses of human rights of some of those regimes and dictatorships."

He first discovered Casement when reading a biography of Joseph Conrad. "I found they met on the day Conrad arrived in the Congo and that Casement had been very influential in opening the eyes of Conrad, who told him 'you've deflowered me,' to the atrocities. Without Roger Casement, I think maybe Conrad would never have written Heart Of Darkness. Yet, tragically, Conrad refused to sign the petition for clemency. I have great admiration for Casement; he was a courageous man but a confused one, too. He led such a mysterious life, which means I had a lot of space for imagination and fantasy. As a novelist I think I can reach the hidden dimension that exists in all of us. Only through fiction can you attempt to reveal a human being's secret life."

Fluent in Spanish, French and English, although he writes in Peruvian Spanish, Vargas Llosa lives in New York. With his second wife, Patricia, who is also his cousin, he travels constantly. For The Dream Of The Celt – three years in the writing – he did a vast amount of research, visiting the Congo, Belgium, Amazonia, Ireland, Peru, New York, London and Spain. The book was first published in Spanish in 2010 shortly before he was awarded the Nobel Prize and has sold more than 750,000 copies.

The couple have three children and six grandchildren, to whom he's dedicated this, his 18th novel. He has also written a dozen works of non-fiction, nine plays and a great many essays and pieces of journalism since beginning his writing career as a cub reporter before studying law and literature at the University of San Marcos in Lima in the mid-1950s – a tumultuous and violent time in Peru – later drawing on that experience in his novel Conversations In The Cathedral (1969).

His first wife was his aunt Julia (his uncle's sister-in-law), of the deliciously comic Aunt Julia And The Scriptwriter, his 1977 book based on their relationship. They eloped and married when he was 19 and she was 32. He believes that falling in love with her was the best thing that could have happened to him as a boy.

Although he accepted Spanish nationality in 1993, his literary language is the language of his country. "I write with a Peruvian nuance. I can't help it; it's my voice, although I'm not a Peruvian writer. I'm a writer who was born in Peru, which is a fact of geography, not literature."

He writes a syndicated column for El Pais, the Spanish daily newspaper in Madrid, and famously ran for President of Peru in 1990 but lost to Alberto Fujimoro – "that mediocre tyrant" – who seized dictatorial powers in 1992. Fujimoro fell in 2000 after one of those peculiarly bizarre Latin American corruption scandals and is now languishing in jail. "Campaigning, I learnt a lot about my country, about myself and about politics," Vargas Llosa says in his heavily-accented, musical English. It also revealed to him that he is a writer, not a politician. Which means that he is "a fanatic", fascinated by fanatics, hence his interest in everyone from the tyrannical Dominican dictator Trujillo (The Feast Of The Goat, 2002) to the self-exiled Gaugin (The Way To Paradise, 2003).

The last time we met, Vargas Llosa told me he regarded himself as a cultural terrorist, someone who "plants bombs". He still insists that good literature should plant a bomb that explodes in the mind, the memory and sensibilities of the reader. Great books, such as Heart Of Darkness and War And Peace, cause "a certain disruption of the mind", which is why he constantly re-reads them.

"You finish these books and you are no longer the same person. Literature changes you. It is the supreme pleasure, a great escape. I am much happier, more complete when I dream through fictions; I can live other lives, have adventures. The real world is often a very mediocre place. It makes you feel only half alive. I come to life when I am in the fantastical world of books or in my imagination," he says, giving the world "fantastical" about nine syllables.

When Vargas Llosa won the Nobel Prize, he joked that the only effect it would have on his life would be the fact that the money that came with it – about $1.5m – would offer "the possibility to buy a lot of books". Today, he sighs heavily, confiding: "It's a fairytale for a week; then for a year it's a nightmare." There is enormous pressure to do dozens of interviews, to make speeches, to accept further doctorates and honours. He is, however, working on a new novel at last, the first he'll publish since winning the prize. No pressure there then?

He laughs loudly. "I published my first novel – The Time Of The Hero – exactly 50 years ago. It enjoyed some success. According to some critics, my literary powers have been waning ever since."

The Dream Of The Celt is published by Faber and Faber, priced £18.99