While Secretary Foster failed to see through Director Gardner's intention, President Hugo understood it clearly.
Evidently, Director Gardner did not see the North as an enemy but as an opponent.
Despite the present odds against the federation, Director Gardner believed it could still make a comeback so long as they secured its interests before the North solidified its power.
As long as the federation's foundation remained firm, the federation could bide its time until it found another chance to surpass the North and become the world's dominant power again.
That was why Director Gardner had only made suggestions to delay the North's growth or allow the federation to keep up with it to some extent and not outright enter a hostile relationship with the North.
Director Gardner recognized the North's present dominance, yes.