First off, why do you think that people living in E”Y are not in galus? We are all in galus until Mashiach comes, whether living in E”Y or not.
I do think the government is appointed by Hashem, as are all world governments. I don’t think they’re holy, at least not more so than any Jew is holy (which is pretty holy!) Most of them probably fall into the category of tinok shenishba.