On the surface, it was a strange statement for the shah to utter — after all, he'd notoriously been reinstalled as Iran's supreme ruler by an Anglo-American coup in August 1953. Ever since too, he'd been a seemingly unwavering ally of London, militarily supporting various British-backed regimes in the Gulf region, becoming one of the country's biggest arms markets in the Middle East, and allowing British Petroleum to pillage the country's vast crude oil reserves at highly beneficial rates.
Moreover, the year prior, then-opposition leader Margaret Thatcher visited Tehran in April, offering a vehement reaffirmation of British support for Pahlavi's rule.
"I have watched the progress of Iran. I have been impressed by the speed and sureness with which an ancient land has transformed itself in a single generation from one of the world's poorer countries into one of its leading military and industrial powers. [The shah] must be one of the world's most far-sighted statesmen…no other world leader has given his country more dynamic leadership. He is leading Iran through a 20th century renaissance," she said.
A mere two months later, then-Labour Foreign Secretary David Owen also signed off on the shipment of 175,000 CS gas cartridges and up to 360 unarmed armoured personnel carriers to Pahlavis' notorious internal security force, SAVAK — which the British helped train — in order to brutally crack down on the initial wave of prostests that would eventually lead to Pahlavi's ouster.
Just Because You're Paranoid…
Despite these rhetorical and practical efforts, the shah's allegations of British support for Khomeini were far from paranoid and bitter conspiracy theorizing. After all, Whitehall had a long-established history of backing the most extreme Islamic factions in the Middle East in order to counter threats to its regional interests, for instance covertly funding and directing the activities of Egypt's Muslim Brotherhood in an ultimately failed effort to depose then-leader Gamal Abdel Nasser in the 1950s.
In fact, another Iranian Ayatollah, Sayyed Kashani, had played a pivotal role in ‘Operation Boot', the very coup d'etat that catapulted Pahlavi back to the throne, funding and organising large-scale protests which provided the — MI6-supported — Iranian army a pretext for removing leader Mohammad Mosaddegh from power.
While it was well-understood the removal of the shah had "the gravest political, strategic and economic implications for the West", that "the emergence of an extreme government dominated by the religious right-wing might create almost as many problems for the Soviet Union", was viewed as a "consolation".
Furthermore though, in addition to expediently limiting damage to Britain's interests in the country, Foreign Office planners were looking ahead — to a time when they could once again install a leader more to their liking. By December 1978, they were arguing ministers should jettison all support for the shah — both public and private — and throw their weight behind the opposition.
"We needed someone with charisma who would only be in post for a few years, brave enough to make enemies, and ready later to step aside for the shah's son as a constitutional monarch," Foreign Secretary Owen wrote in his memoirs.