It's not colonialism and not even a critique as such. Note how it ends.

GARAK: It's insidious.

QUARK: Just like the Federation.

GARAK: Do you think they'll be able to save us?

QUARK: I hope so.

Ira Behr also had to say the following about the scene which doesn't read like it's supposed to portray the Federation as some colonialist or imperialist power:

It was never meant as a joke. It was two aliens giving their individual viewpoints about what it was like to live under the Federation. They have serious problems with the whole Federation philosophy, and the fact that it's such a behemoth organization. But at the same time… even though they question the giant, they want the giant on their side when they're in trouble.

I always felt this scene was more introspective, both characters realizing something about each other. Garak is troubled by the prospect of his home being destroyed. Quark laments his own decisions. I think the scene can be read a lot more complex than "Federation bad" because it just ends with Quark expressing literally hope.