What are the internal issues of Gridania?

[Mahri]

I think people are using the word "racism" for xenofobism. Their attitude is toward anyone not native to Gridania, regardless of race. Citizens are from different races too (beside hyur and elezen) - botanist guild's guildmaster is a lalafel.

It's both, actually.

Xenophobia is their refusal to assist foreigners unless their magical invisible tree friends say so. The main scenario quest goes into this in detail.

Racism is demonstrated in the Lancer and Archer guild quests -- respectively, the lack of trust offered to Duskwights, and the view of Moon Keepers as ignorant savages (and both quest stories have these prejudices coming back to bite them in the ass)

Out of all 3 city i would still pick grid, When a city seem like a good area and everyone seem happy there something really fuck up going that no one know about yet. Look how crazy ul'dah have become and we knew a lot of the issue that was going on.

I've said it before, I'll say it again: Lominsa has no undercurrent of something shady going on. All shady business is conducted in the bright sunlight! What you see is what you get.

Gridania's less-savory elements are borne primarily of culturally ingrained hostility towards outsiders. Ul'dah, though...just, Ul'dah's got problems man.