Shalimar the Clown, by Salman Rushdie

In Kashmir, the tolerance of neighbouring, multi-faith villages of performers and cooks has permitted the Hindu-Muslim love marriage of a dancer, Boonyi Kaul, and an actor, the high-wire artiste and clown, Shalimar Noman. Later, massive state repression, inter-communal violence and increasingly fanatical religious ideologies turn the traditional magical vistas into a bloody Himalayan dystopia.

The Jewish Max Ophuls - a French Resistance forger, a philanderer and now the US ambassador to India - is enticed by Boonyi's deliberately sensual dance into a sugar-daddy contract in Delhi. The sugar dissolves and, on returning, sans daughter, to her village, Boonyi is treated as a pariah. Dishonoured, Shalimar abandons his home and his acting tradition and joins the Kashmiri resistance, but owes allegiance only to personal revenge.

Max's wartime exploits interweave with the crises of his illegitimate daughter, the LA rich girl India (aka Kashmira). After her father's death, she explores the identities of the mother she never knew, and the historical, mythical and political ontologies of Kashmir.

Appropriately, this novel is both deeply disturbing and immensely moving. Salman Rushdie the Kashmiri writes from the heart as he describes this dark incandescence. His prose, like Kashmir, is an exquisite, broken thing of pain and beauty. In an earthy, poetic Sufism, he captures perfectly the existential intimacies between lovers and between people, song, dance and land.

Rushdie adroitly skewers political hypocrisy and directly challenges the "killing field" juggernaut of Indian state power. On the other side, the nightmarish golem of the "iron mullah", fattened on US-Pakistani state militarism, shifts the Kashmiri rebel consciousness from liberatory nationalism to jihadist apocalypse. Meanwhile Max, the anti-Nazi war hero and immigrant to the US, becomes "a servant of his adopted country's overweening, amoral might", and supplies terrorists with cash, cachet and coups.

Yet there are moments of wry humour, as when the dead seeress Nazarébaddoor advises a goat farmer: "Don't marry your daughter to that boy - his cousins in the north are dwarfs." Most writers can only dream of possessing Rushdie's structural and storytelling skills. The cinematic end is as gripping as the best crime thrillers, yet as hierophantic and shattering as a folk-song.

Any quibbles are relative and do not demolish the power of this remarkable book. With India Ophuls, Rushdie attempts to verify character through layering, and there is much brilliance. Yet somehow she is too writerly a creation wholly to convince, and by the time she falls for a Kashmiri Sikh, it seems as if Rushdie is in a rush.

Too often, the magical-realist style spins the banal into the preposterous, the jabberingly tedious, rather than the enthralling. And so it came to pass that five-and-twenty years on, in Anglophonia, this once revolutionary type of writing just feels formulaic, passé, unengaged.

On occasion, demotic speech seems shackled to an archaic decorum, a supercilious comicality that passes for irony but rendered clumsily through a British imperial consciousness, as with Max's Indian landlady in London: "Letter, Mr Max, from Mrs Max! I hopen it, sir? Yes, sir! Hokay! Mrs Max is bein' fine, sir!" I have never heard a South Asian person talk like that.

There is more exotic buffoonery when, in the Kashmiri village, "Grandfather Farang was buried with bewildering speed". Muslim and Jewish traditions both require rapid inhumation; to whom, then, is this bewildering? And should not the Rhine spirits of Ashkenazi tzaddiks and medieval Alsatian warlords also spin, slash, sing, advise and haunt the narrative? As with most products of the transnational publishing industry, the normative absolutes of this otherwise ferocious text remain bounded by the unspoken limitations of the English über-class.

In the sections set in the Franco-German marches of Alsace, the writing falls into a journalistic, reverential tone, where research predominates over character. Indeed, the characters here seem derived, rather than sculpted. The Piano meets Boy's Own meets The Sound of Music, and there is no sense of horror. However, immediately we return to things South Asian, the fire is rekindled.

Shalimar the Clown is a brilliant symphony with some bum notes. Its shuddering epiphany and dynamic immediacy are exceptional, and the characters of the villagers are drawn with humour, intelligence and intense emotional power. With fewer of the stylistic irritations of his previous fictions, this is one of Rushdie's best novels yet. The horror that it depicts demands to be screamed, word by word, at the minarets, mandars, steeples and congresses of those who facilitate killing, rape and torture - and at those who, unlike Rushdie, have not the courage to ask of their rulers, of their religions, of themselves: why is that?

Suhayl Saadi's novel 'Psychoraag' (Black & White) was shortlisted for the James Tait Black memorial prize