@diidlydoo: Making peace between humans and demons isn't even in their job description. "CATT" stands for "Counter-Asmodian Tactical Team"; they're literally an anti-demon counter-terrorist unit whose sole purpose is to combat demon-perpetrated terrorism (presumably, no demon community is big enough to count as a country, and thus the conflict with them wasn't what you'd call an actual war).
You are, of course, right in that they're losing sight of their mission, having let paranoia overcome them to the point where they see demons having a self-governing community as an existential threat in itself, though it's unclear so far whether they want to outright exterminate all the SAZ demons or would spare those who don't fight back and
force them to integrate into human society (and thus fall under the heel of its legal systems).