Humans in the setting are annoying and uppity, so I sided with the council, I mean if you consider their perspective the humans come across like Qanon fanatics screaming about evil space demons and literal visions of doom, if I was the council I would've revoked their embassy and sanctioned earth for the good of the galaxy
Of course like the rest of the game it isn't much of a choice; do you want to save the alien space neolibs or install human space neolibs who are more openly racist?