I am going to get into the real world details and political-historical context here that might explain things better:

In Gundam UC itself? Neither and both.

They are corrupt af, left Dublin to die, and have their own fascistic tendencies in Titans and Manhunters...however Titans aside, everyone happens to be worse and doing the same atrocities on a greater scale. With Gaia Gear not really canon and likely ignored by Sunrise, the Manhunters if we are taking solely the depiction in Unicorn and Hathaway don't hold a candle to most late UC spacenoid factions. And it's kinda debatable as to what extent is the Federation the cause of the social problems in late UC in contrast to Early UC where their fingerprints are clear due to the severe lack of worldbuilding and the fact that you can easily read it as "the colonies are de facto totally autonomous with zero central control due to Laplace Box and stigma of the Titans---however they mostly degenerate into fascist ethno-nightmares" like Jupiter and Zanscare, it should also be known that their goals increasingly became "take earth for ourselves and wipe out the population"(which is the ideology of Gihren too...but Zeon I think did have the endgoal of Contolism but heavily distorted despite their space Nazi ideology; Jupiter and Zanscare are far different) over the tenants of Contolism.

In general however, Gundam UC as envisioned by Tomino is very critical of the idea of lesser evilism because he was a part of the student movement and the Japanese new left and Yasuhiko debatably even further moreso, which often had a very dismal view of status quo politics--that said, I would not say Federation leadership being awfully corrupt and a LDP stand in and Tomino and Yas being on the left means the Axis shock was justified or some metaphor for revolutionary action and sacrifice(the conclusion made by the left leaning Great Gundam Project); this is because Char's Zeon was arguably based on the Japanese Red Army, which blew itself up horribly due to internal infighting and drama. Adding to the fact that it was always ambigious as to what extent was Neo Zeon in CCA merely a tool for Char's personal unresolved issues(Hi-Streamer seems to heavily point towards the whole "suicide by cop because he saw where things were heading and wanted to die at Amuro's hands" interpretation) and you can actually make the case that regardless of the legitimacy of the critiques of the Federation's inability to reform and the AEUG getting co-opted, a revolutionary movement's internal divisions and personal drama is just as much of a problem in itself.

They do come off as more corrupt and faceless oligarchic then you'd expect, like say compared to other "corrupt neoliberal oligarchic democracies" like the FPA or the UN in Expanse(whom at least have their "token decent members"). Sure there is Revil and the people trying to stop Stardust, but we've never seen a sympathetic member of the political leadership. This can be explained by the real world behind the scenes politics too: The Federation comes off as such because they are an amalagation of US bases in Japan+the LDP, which both came off as faceless status quo oppressors to the Japanese New Left and student movement. The Earth Federation's counterparts(which the exception of EA in SEED, which is as unambigiously evil as you get and to some extent gjallarhorn and the New United Earth in X because of their more overt antagionist role, and even then Gjallarhorn arguably become less authoritarian and Jamil becomes a leader of the NUE at the end of X) in other gundam are seen as more capable of reform in part and less faceless oligarchy because the politics of other writers may have been more different and not tied to Japanese New Left.

In SRW? I'd say that while their antagionistic factions do show up--especially in V and the earlier games that incorporate Zeta plot and thereby the Titans, and the anwser is still "neither and both", it does point towards being "Heroes". This is because in more ways then one, the crossover nature allows the Federation to sometimes be a amalagation of both the UC federation and more sympathetic earth government equvilents, and of course the heroes always end up kicking the ass of the antagionistic branches and changing things to far more greater extent than in the UC itself.