The situation is, two forces are fighting each other in a war, while you are doing nothing. The intention is to let them destroy or weaken each other before you make a move.
Any verb or verb phrase for this? "Waiting" isn't good enough, and "biding time" doesn't have the right connotations because it's too general. Also, the notion of neutrality isn't good enough either, because usually you think of neutral nations as having no intention to enter the war (or at least not as a major player but possibly a tag-along ally).
I swear when I first tried to think of this, I came up with "dinkering". Onomatopoeically it somehow seemed right, but it doesn't appear to even exist.