Malcolm said that went he was considering his future, it was between Starfleet and the British ("Royal?") Navy.
But his future was well in the show's past: he had made the decision already, long enough ago that he now was a Lieutenant in Starfleet.
The Federation in one TNG episode was considering a world for membership with at least two separate nations on it.
...But apparently for the very first time. So the "preference" would have rather deep roots.
In any case, it seemed the Federation was considering making the Kes members while leaving the Prytt outside the UFP, despite the two sharing a planet. Essentially, they'd still be doing the "single government for single member" thing there.