(FORTUNE Magazine) – IN HIS 5 1/2 YEARS as Soviet Foreign Minister, Eduard Shevardnadze was almost as well known around the world as Mikhail Gorbachev. Last December he shocked West and East alike by abruptly resigning. He warned that reactionary forces were threatening perestroika and that ''dictatorship is coming.'' A Georgian once close to Gorbachev, he is one of the architects of perestroika. Since his resignation, he has kept a remarkably high profile, receiving a daily stream of visitors at the nongovernmental Foreign Policy Association, which he founded. He may well return to the top levels of government. His approval rating in a recent poll far outpaced Gorbachev's and even topped that of the immensely popular Boris Yeltsin, chairman of the Russian Parliament. On the eve of a lecture tour to the U.S., Shevardnadze met with FORTUNE's Moscow bureau chief, Paul Hofheinz, for a 45-minute conversation in Russian. Excerpts:

Do you still think dictatorship can happen? Yes. Things are even more complicated now. Social tension is rising. Living conditions are getting worse. Ethnic conflicts are not stopping. ((Gorbachev)) himself has spoken of the possibility of chaos. And if chaos is possible, then of course there is a danger that a dictatorship will emerge. Chaos, it is said, gives birth to the most horrible dictatorships. It's logical.

How real is the threat of a right-wing military coup? That's one of the possible variants. But I don't know. A dictator could be a military man, or a civilian leader, or even a complete unknown whom we haven't reckoned with. If it does happen, it will be a tragedy.

Can Western business play a role in stabilizing things? Yes, a great one, by developing economic relations. Much depends on what Western investors do. For now, ((business relations with the U.S.)) are rather modest, but if you consider the scale that they could take on, ((the role of investors)) could be great.

Is an investment in the Soviet Union safe? I can't say that some sort of risk is 100% excluded. Even in the most developed countries with healthy financial situations and prosperous economies, you will find a certain risk. There is no business without risk. But Russia, and the Soviet Union as a whole, is a very promising market. If dictatorship happens, it will be more than just a risk for businessmen. It will mean more than material and moral losses. That's why I am stressing cooperation -- mutually advantageous, wide-ranging, ongoing, long-term cooperation. That's the kind of cooperation that will, to some extent, prevent the appearance of people with dictatorial ideas.

In your resignation speech you said, ''The future belongs to democracy and freedom.'' Why do you think this? Because of the tremendous potential that rests in our people. Our people have tremendous potential -- intellectual potential in the first place. We have a very high standard of education. And the active support that we felt in the first stages of perestroika and democratization, support coming from the people themselves, also convinces me that democracy and freedom will triumph. Democracy is stronger than any dictatorship -- as long as the democratic movement is organized. Our misfortune is that the democratic movement does not have the structure it needs. A lot of people are thinking about this now -- especially after my statement. People are exchanging views, more than they did in the past, about how we can form that kind of democratic structure more quickly, a structure that would be a support and a guarantee of unity and solidarity.

What happened to perestroika? Did Gorbachev become frightened at the direction reform was taking? Or did the conservatives put pressure on him? Right now ((Gorbachev)) is facing the fact that the country is undergoing a crisis -- in the full sense of the word. People live badly. They have great needs. Stores are empty. ((There is)) disappointment. Believe me, under these conditions, it is very hard to find popular decisions. Strikes are spreading, with great losses. Destructive forces are appearing. Why did it happen that way? Because we were all very inexperienced. We < started a revolution, a revolution in the full sense of the term, a wide- scale, bloodless, peaceful revolution. Well, it didn't work out the way we would have liked. We were late with many major decisions -- for example, with ((the plan for establishing)) a market economy. Of course, we should have understood this three or maybe even four years ago. Of course, there would have been difficulties, but back then people were with us and believed us, and we received support. You can say the same thing in relation to the construction of a ''new federation,'' as we still say. Any union treaty, including the one that is being put forward now, would have been supported by the people if we had put it forward three or four years ago. Today it is late. When you're late, well, life has its own laws. And they are very strict. Life is punishing us. That's why Gorbachev and society and the leadership as well find themselves in a difficult and complicated situation. Decisions have been taken -- on the market economy and other matters. Now we must act and act, work and act wisely. Every day we must accomplish something. The concept of perestroika can never stand in place. We have to constantly seek new approaches, new solutions. That process is going on now. But do we need to invent a new perestroika? ((Laughs.)) Well, I think it is terrible to even talk about that, because people might say, ''Enough of this perestroika!'' Everyone wants concrete results. That's what we need now.

Has Gorbachev himself changed? You can't put the question that way. The situation has changed, and the situation itself has forced him to look for different paths and solutions. Perhaps even the kind that don't agree with his temperament and convictions. I don't exclude this. The situation has changed.

Do you think he is a democrat? ((Pause.)) I think so. At least that has always been my impression. At our last meeting, he said again that ((he was)) devoted to the ideals of perestroika and democracy.

What do you think of Boris Yeltsin? I don't want to say anything bad about Gorbachev or about Yeltsin. I am not one of those who pretend to have an absolute knowledge of people. I think that Yeltsin has well-known popular support, a certain authority, many interesting, businesslike qualities. What needs to be done? I've said this several times. They must meet. And not just once but often, maybe even several times a day. I remember well how we started the discussions with Ronald Reagan. He thought that we were representatives of the evil empire. We responded: ''You imperialists!'' That's how the dialogue started. It is absolutely unbelievable that in 5 1/2 years we have achieved the kind of relations that we have now. And why? We weren't afraid. We were certain that sooner or later we would achieve concrete results. We need to sit Gorbachev and Yeltsin down like that. The country is perishing, burning in the literal sense. And the two leaders can't find a common language! This is something I cannot forgive. ((After Shevardnadze spoke, the two leaders met, issuing a joint appeal for unity.))

Is Yeltsin a man the West can trust? How should the West respond to him? The West should respond to Yeltsin as the leader of a strong republic, the strongest and biggest republic, a republic that has 150 million people. He is not a fluke, or a person who only cropped up yesterday. He has traveled a long road. He has a lot of experience. He is a leader and a politician.

He is a very complex figure, and people in the U.S. wonder how they should react to him. You must have relations with everyone. This is perhaps the most important thing I would want to say to business circles -- and to political circles as well -- you must have relations with everybody. Naturally you shouldn't ignore the center, the central government in Moscow. The center remains the center, and will remain the center, I believe. You can't ignore it.

If your name is put forward as a candidate for President of the Soviet Union, would you run? That won't happen, and I haven't thought about it. I don't think it's realistic.

I think it's very realistic. ((Laughs.)) Everyone has the right to his opinion.