Question

These Muslims believe that Ali, a relative of Muhammad, should have

been the first caliph (political and religious leader of the new Arab
religion and empire):
Sunni
Shia

Answer 1

Shia is the answer.

Shias regard Ali(r.a) as the first Imam and consider him, along with his descendants, to be one of the divinely appointed successors of Holy Prophet Muhammad (S.A.W) who are claimed by the Shia of the Muslim community.

Answer 2

Hey :)

Shia Muslims believe that Ali, the cousin of the prophet Muhammad should have been the first caliph instead of Abu Bakr

Hope this helps!