The Galaxy Federation Government (GFG) is the body that governs nearly 500,000 planets throughout the known universe, and essentially rules and governs humanity in Xenosaga. The Federation's original capital was Earth (Lost Jerusalem). However, Earth was abandoned and the Federation was forced to relocate its capital four times. Its current planetary capital is Fifth Jerusalem.
Sergius XVII says, "Thanks to the U.M.N. and the Federation. They've managed to reduce the people to a mass of spineless weaklings." While the Galaxy Federation is not intrinsically evil or malevolent, it is responsible for brainwashing humanity into conforming through fear-mongering, thought control, education, schools, media and entertainment.
The Federation acts as an over-reaching government system, which allows each individual planet to retain its own government. The lower form of the Federation's ruling body is the Galaxy Federation assembly, which comprises representatives from each planet in the government. Although the assembly is located on Fifth Jerusalem itself, many Representatives choose to participate via a U.M.N. connection. The higher level of the Federation's ruling body is referred to as the Executive Committee or Executive Committee assembly, which makes the final decision based on both their own discussions and those of the representatives. The highest position in the Galaxy Federation Government is the Executive Committee Director, who must be elected via a majority vote by the entire GFG. This position was held by the current Vector Industries CEO, Wilhelm, until several years prior to Episode I.
Additionally, there are several councils that regulate the various aspects of the government, such as the Subcommittee On Close Encounters (S.O.C.E.) and the financial group. The U-TIC Organization, a dummy group for Ormus, has planted several moles within the Federation (Representative) assembly, S.O.C.E., and the financial council. These spies disrupted the Federation during the latter half of Episode I, when the Kukai Foundation and the Second Miltian Government were charged with treason, thus giving U-TIC a distraction to commence with their plans. Since then, no other incidents have occurred from within the Federation's ranks.
Like Ormus and Vector Industries, the Galaxy Federation is interested in securing the Original Zohar, originally sealed away on Old Miltia. However, Ormus uses the Immigrant Fleet, U-TIC, and Albedo Piazzolla to obtain the Y-Data, which allowed them to locate Old Miltia and secure the Zohar before the Federation could. Although the Federation and Vector Industries team up to stop Ormus in Episode II, they always remain separate factions.
In Episode III, Federation forces attacked and boarded the Durandal, led by Gaignun Kukai possessed by Dmitri Yuriev. All the crew were killed except for Mary Godwin and Shelley Godwin, who both held the Arbiter code that seals off the Zohar Emulators on board the Durandal.