Situated in the heart of the Iranian capital, Tehran's Museum of Contemporary Art is home to the world's most valuable collection of western modern art outside Europe and the United States. The rarely shown collection, which includes works by giants such as Pollock, Warhol and Bacon, was bought under the supervision of Farah Pahlavi, the former queen of Iran who fled the country along with the late Shah during the turbulent events of the 1979 Islamic revolution. The Guardian has spoken to the former empress about the museum and its remarkable collection on the occasion of an exhibition showing some of the art pieces for the first time.

Q. Where did the idea for the collection come from?

I have always been fascinated with the arts. When I was in Iran in that position I was constantly concerned with promoting our Iranian traditional art but, at the same time, with introducing contemporary and modern art. I was particularly interested in modern paintings and sculptures. A number of private galleries were open at the time and the ministry of culture had a biennial of art and I was always involved in the inaugurations and the ceremonies.

I was interested in buying contemporary works and encouraged public offices to buy them at all times. Our curators and collectors at that time were mostly interested in the traditional art and not so much in the modern art. This is why I encouraged our private and public figures to buy modern works.

There was an exhibition which I participated in and there Mrs Iran Darroudi [an Iranian artist] had put some of her works on display. It was an exhibition held in a place between Pahlavi Street and Shahreza Street, the place where City Theatre was built, there was an old building in a place called Municipal Gardens. I remember Mrs Darroudi telling me she wished we had a place where we could put our works on show permanently, that was how the idea for Tehran's museum of contemporary art came up. I thought how good it would be to have a museum where we could put the works of our contemporary artists. Later I thought, why shouldn't we include foreign works, this is how it all started, as far as I remember. I spoke to Mr Kamran Diba [a prominent architect and a cousin of Farah Pahlavi] to design the museum.

It was the early 1970s, our oil revenue had significantly increased and I spoke to His Majesty [the Shah] and [the then prime minister] Mr Amir-Abbas Hoveyda, and told them that it was the best time to buy some of our ancient works both internally and from outside. They agreed. The museum was supposed to be built in Farah park which is now called Laleh park. I wanted it to be built in a park so that people could have better and easier access to the museum. I remember they intended to build houses in Farah park and His Majesty was away from Iran, I contacted him and wrote to him asking them to stop the construction which they did. The Museum of Contemporary Art and Museum of Carpets were built there. I wanted the museum's building to be both inspired by our ancient architecture and have modern elements and Mr Diba did it so well, the museum's rooms were designed in a way that the light came in through windows similar to the wind-catchers of Yazd's deserts.

Q. Who actually selected the art pieces?

Both Iranian and foreign works were bought under the supervision of my office. We provided the budget from NIOC [National Iranian Oil Company] and the budget planning office. Of the people involved, two were Americans, Donna Stein and David Galloway, and Mr Diba, who was the director of the museum, and Mr Karimpasha Bahadori, who was the chief of staff of the cabinet. Most of the paintings were bought under the direct supervision of my office with help from Mr Bahadori. He had met the president of Christie's and Sotheby's and the [Ernst] Beyeler art gallery in Switzerland. When Mr Bahadori left the office, Mr Diba became more involved with selecting the works.

Q. How do you feel now to see the collection gathering dust in the basement of the museum?

I hope these works are not buried in the museum's basement aimlessly. I was very worried for the fate of those paintings during those events [at the time of the revolution], I was worried that the revolutionaries would destroy them but fortunately the museum staff protected them in the basement and Mehdi Kowsar, the head of Tehran University architecture faculty, made a list of all the works and helped to protect them in that basement. He later became the director of the museum when Mr Diba left.

I hope the collection is protected well there. I have seen some of them in films and I'm happy that some years ago the director of the museum showed some of the works and made a catalogue listing the works, I'm happy that people have realised what was hidden there. I hope, too, that they make a catalogue of the Iranian art collection that was bought during my time so that people can realise what we bought from the Iranian art at the same time. It is a national asset and I hope they preserve it well. It's the most valuable collection of western modern art outside Europe and the US.

It was 1977 when it was inaugurated and we put them on display, His Majesty was there, also some foreign reporters and I remember that some of the reporters were thinking Iranians don't deserve to have these paintings, it was insulting, but they were not only foreign works, we had Iranian art, films, photography too. I am happy they are still there.

Q. What is your reaction to see some of the works censured?

As long as they don't destroy them and they keep them safe, I'm happy. If they don't want to show them, let them not show them, but I'm happy as far as they are safe. Is everything that is happening in Iran now Islamic? Is it only Degas's painting [Ballet Dancers] that is un-Islamic? I heard that they sent some Francis Bacon works to London and showed them there. Recently some Max Ernst paintings were shown in the Pompidou Centre in Paris including the one belonging to Tehran's museum as part of the surrealist exhibition. The Ernst painting that we have in Iran is his most beautiful painting, even better than those now on show in Germany.

Q. And your reaction to the work that was swapped?

To be honest, I don't dare to speak about those paintings freely, because I know some people have their eyes on these works or want to make Iran exchange them and I want the collection to stay in Iran. Jackson Pollock's painting, which has an unbelievable price, was sent to Japan recently but confiscated on its return to Tehran in customs. When the director of the museum inquired, he was told the painting had been taken as ransom for the money that the ministry of culture owed to the customs. I instantly issued a statement in protest.

There was a painting that they exchanged some years ago, it was a painting by Willem de Kooning, which was deemed un-Islamic. They exchanged it for the Shahnameh owned by the American art collector Houghton. It's the Shahnameh that originally belonged to Shah Tahmasb [of the Safavid dynasty] and it's the most beautiful ever. In 1970, we wanted to buy it but it cost some $20m which we couldn't pay at the time. The owner printed them and gave some of its miniatures to the Metropolitan museum in New York and put some on sale. What was left apparently cost only $6m and the Islamic republic exchanged de Kooning's painting for that. If they were really interested in the Shahnameh, couldn't they pay $6m and keep de Kooning's painting? The US businessman David Geffen, who bought the painting for some $20m, sold it for some $110m few years ago. The de Kooning exchange is the sole exchange they've done so far and I hope it remains the last one.

I follow the works of Iranian artists even now, sometimes in Paris or in New York and I am happy Iranian artists are still great. Whether they are men or women, they have always been great. Despite all the pressure and censorship inside the country, they haven't been able to stop the creativity of our artists. Some have to work underground, like in cinema, and sometimes their work has political messages, but the number of our artists now has definitely grown in comparison to the past. In reality, I admire all the new groups that exist, because in the beginning they had even banned the traditional Iranian music and some artists were practicing underground. I admire the film directors including those who have recently won international recognition, but I particularly regret that Iranian musicians are not allowed to show their instruments on national TV and the fact that lady singers cannot sign individually.

The picture of today's Iran in the world is terrible, comparing the past and now. I'm happy that few years ago at the time of Tehran's post-election unrest in 2009, the world for the first time in many years saw the true face of Iranians and both people inside the country and foreigners once again reminded themselves of Iran's glorious civilisation, history and art. I hope the situation changes and they can have the regime they deserve.

Q. Anything to you want to add about the museum's collection?

In one of the films shown in the US from that basement, I saw that the painting Andy Warhol drew of me was cut by knives and a sculpture of Bahman Moases that they didn't like was broken. I had the chance to meet some of these artists in person, like Marc Chagall, whom I met in southern France, Dali in Paris, Henry Moore in the suburbs of London, Paul Jenkins in the US and the Italian sculptor Arnaldo Pomodoro, who we had commissioned to make three bronze columns for the museum's entrance, a project that was disrupted by the revolution. When I was in the US few years ago on a flight to Connecticut, I realised they had been bought by the Pepsi company.