[X] As long as they are only killing each other, it is too risky to get involved.
Sure, let them weaken themselves; some people might get in the crossfire, and we might be blamed for not intervening, but the resultant violence give us a casus belli which we can use to crackdown on our political enemies.
[X] Our greatest strength is the Navy, let us increase wages, stockpile oil reserves, and engage in long delayed wargames.
Although it would be tempting to strengthen the army, let us not forget that when the civil war inevitably begins, the internationale and Mitteleuropa will flock to the CSA and AUS to deliver supplies and men; ensuring that our navy is strong and well-oiled not only decreases the likelihood that they'll be defectors within the navy, but also increases the likelihood of establishing at least some sort of punitive blockade to cut our enemies off from their benefactors.