For decades, most Iranians had resented the Anglo-Iranian Oil Company (51% of which was under the control of the British government) for the perceived injustice of allocating most profits to the company and the British government, while only a very small proportion was given to Iran, despite the fact that the oil fields were on Iranian territory.

Baghai made himself known as a fiery critic of the British and he allied himself with those of like mind, including Dr. Mohammad Mossadegh (a man who had risen to prominence as a fierce critic of Reza Shah, the despotic ruler of Iran from 1921 to 1941, and of the British control of the oil fields and that country's interference in Iran's internal affairs).

But by late 1952, Baghai had become disillusioned with Mossadegh, pulling his Toilers Party out of the National Front and siding with the pro-Shah elements, who were present in the Majlis, military, press, royal court and other institutions.

In taking this course, he split with Khalil Maleki, who remained loyal to Mossadegh and formed his own group called the Third Force.

On 19 August 1953, the CIA and MI6 sponsored a coup d'etat against Mossadegh which succeeded in toppling his government and restoring the monarchy to Iran.