Someone said the current generation replaced the religions of Gods with the religion of Government: they put a lot of faith and trust into Governments and then play amazed when they fail.
Governments (and cities are local governments, for the matter) have huge powers in what they can do and what they can do to the citizens. For example in Romania, my country, government entities are practically exempted from GDPR; they also exempt banks and other regulated entities from GDPR rules on collecting data in weird ways, for example there is a national bank rule that the banks need to collect personal data about account holders, no matter the age or amount, that does not apply to the account holder but allows the bank to freeze all your accounts if you don't comply. They really don't need to know your mother's name, but they get it this way and GDPR protection agency never takes action on these situations.
Lisbon city giving such data to embassies is not a mistake or stupidity, it is abuse of power. They have a power that is just transferred at elections to different masters, but they act like they own, in a feudal way, the people. As someone recently said (about taxes): "where are they going to go? We put a minimum everywhere, so there is no escape"