The country of klatch has a policy of never involving itself in the affairs of its neighboring countries, whether it be military conflicts or general power struggles. this is an example of what policy?

I believe this is the policy of isolationism.
Isolationism is the policy where a country decides to separate from the rest of the world, turning rather towards itself and its own needs. Japan used to be an isolated country for a very long time, and even America practiced this policy of isolationism during the world wars because it didn't want to meddle with the rest of the world. 

Bthreatening to ally with germany