Jaresh-Inyo said he was "elected," but by whom? If it was just the members of the council, without any input by the populace, then that would be a democracy of sorts. But we've never heard any one of our hero speaking of a general election by the populace of the total federation.
Laxana Troi (sp?) seemed to have obtain her ambassador's position by way of her family's prominate place in Betazed society. So perhaps Betazed is ruled by a unelected aristocracy.