THE STRANGE NATION OF RAFAEL MENDES By Moacyr Scliar Translated from the Portuguese by Eloah F. Giacomelli Harmony Books. 309 pp. $19.95

BRAZIL, ALIVE with contrasts. A First World country at the beach, a Third World country on the hillsides. Jazz and recording studios in Rio, sad songs and Yoruba drumming in the slums. Carnival and poverty. The Roman Catholic Church, macumba and offerings to Iemanja', goddess of the sea. A president named Kubitschek, an architect named Niemeyer and a reverence for all things French. A nation of Africans, Indians, Portuguese and of foreigners: Slavs, Japanese, Germans, Jews.

Early in the century, many European Jews settled in Brazil, primarily in the south. Their story has been told before now; in 1956, Samuel Rawet's Contos do imigrante ("An Immigrant's Stories") recounted his experiences as a Polish-Jewish immigrant in Rio. Now Moacyr Scliar -- whose 17 books have not kept him from practicing medicine in Porto Alegre -- has reached English-language readers. Five of his books, including the dazzling The Centaur in the Garden, have appeared in the last three years. His latest novel is The Strange Nation of Rafael Mendes and it makes me feel that stars, both literary and otherwise, must surely shine brighter in the Brazilian sky than elsewhere.

Scliar's Russian-Jewish family came to Brazil at the turn of the century, bringing with them the ancient heritage of Jewish history. (No problem; Brazil has room for it.) While that heritage informs all of Scliar's writing, it is the actual subject of his latest book. The "nation" of the title is the Jewish people, and this is a wonderfully Jewish novel about lives lived within a tradition, within a context, shaped by a larger vision. But Scliar is just as Brazilian as he is Jewish, and this is also a wonderfully Brazilian novel, with the same kind of storytelling power and innovation, the same variety of color and event, that we have learned to expect from other Brazilians like Jorge Amado, Ma'rcio Souza, Igna'cio de Loyola Brandao and Marcos Rey.

Scliar's vision and daring are large, and his story of a single day in the life of Rafael Mendes, a financial company executive in Porto Alegre, is only the gateway to what becomes, in fact, a history of the Jewish nation . . . and a history of Brazil. A mysterious package puts Mendes in touch with an old genealogist who gives him two notebooks written by his dead father, a previous Rafael Mendes, and much of the novel consists of those notebooks. The first identifies the Mendes family line with Jonah (of whale fame) and then moves forward through history, touching the Essenes, pausing with Maimonides (whose Guide for the Perplexed echoes through all the rest of the tale), and pausing again with an earlier Rafael Mendes, a 15th-century Portuguese cartographer who nearly sailed with Columbus.

The Inquisition figures largely in the story, and the birth of the cristao-novo, the "New Christian," the Jew who took on the protective coloration of Christianity in order to survive. From then on, a long line of Rafael Mendeses comes forward to the present. One of them arrives in Brazil in the 16th century, and thereafter the histories of Rafael Mendeses are tied to that country's history, including a dramatic meeting with the 17th-century leader of Brazil's greatest slave rebellion, Zumbi of Palmares.

The second notebook is the personal account of the life of Rafael Mendes pe`re and of Brazilian history through the 1920s, the communist stirrings of the 1930s, and President Getu'lio Vargas' establishment of Brazil's Estado Novo, the "New State." Through it all, the (almost) broken line of Rafael Mendeses links the history of the Jewish experience -- in its daily and practical effects -- to our own present-day Rafael Mendes. And the shock for him is that, until the day he gets his father's notebooks, he didn't even know he was Jewish.

"And yet," as his father writes, "there was something. A certain attraction for the exotic, the mysterious, the secret; a certain fascination for paradoxes." Indeed, through the history of all these Rafael Mendeses, there has always been a search for a mysterious and elusive "Gold Tree," understood finally to be the "Tree of Life," which might just be, if seen clearly, the genealogical tree that ultimately brings our Rafael Mendes both backward and forward to himself, and to an insight: "Instead of solutions, fantasies; instead of answers, imaginary possibilities."

Scliar's voice is a fresh one, his artistic roots as firmly fixed in Jewish tradition and mythology as they are in Brazil's literary history and the "modernism" of Mario de Andrade, author of Macunai'ma (1928) and founder in 1937, the year of Scliar's birth, of the Brazilian Society of Ethnography and Folklore. Andrade advocated the development of artistic forms specially suited to the spirit and language of Brazil. Given the breadth and depth of Brazilian artistic life, it is not at all surprising that her latest literary invention -- original, fascinating, powerful, compelling and everything good that can be said about a novel -- comes from the son of Russian-Jewish immigrants.

Alan Ryan is a novelist and journalist. His latest book is "The Bones Wizard," a collection of stories.