Yes, there is a lot of room for discussion, this scenario is complex and difficult and can serve to teach a variety of lessons. I will take on your questions one-by-one and attempt to provide a broader look at how to approach this situation.
First, if Blue and Red make a treaty, which is entirely in the realm of possibility, you will then be forced to ally with Green or else you are doomed. Blue and Yellow are the weakest players in this game based on the strength (or lack thereof) of their position. So if one of them is left out in the cold in terms of alliances, then the game may be very short for them. Eventually Blue will be raking in the armies as he is propped up by Red who is raking them in already and they will take you out in a race against Green for your cards and territories. I would attack Blue hard and fast if he were allied with Red by taking Europe and Brazil. More importantly, you are right: whatever happens, prevent The American Red/Blue alliance from even coming into existence.
I agree with you that the diplomacy you should undertake to prevent the alliance from happening should focus on the fact that if Red takes out Blue now, he can benefit more than if he allies with him. Blue really isn’t much of a threat to Red and I would point that out. Red goes before Blue in this scenario so Red can attack first and force Blue’s hand. If Red takes Blue out, then he has increased the number of territories he has and decreased the number of armies at his front door and potentially he could get another continent without increasing the number of borders he has. All of these benefits should become apparent and Red should see the folly of partnering with Blue. Besides, where else will Red go? There are buffer states between his other big stacks of armies at his other borders. The prime place to attack is in South America. Red may be eyeing Europe as a place to expand since there are more armies located there and his alliance with South America will certainly aid in that goal. This is not good for you since this is where you want to go as well. Red and Blue must be made to fight!
You stated in number 2. of your response to me: “If I ally with Blue, Green can still become upset.” I wonder if you meant Blue or Red in this one. I still don’t think an alliance with Blue is a good idea. But an alliance with Red will certainly raise the ire of Green and will prompt an attack. In fact, the more I look at this set-up, and alliance with Red will almost certainly bring an attack from Green’s 7-man death squad in the Ukraine. Green will get from 5-7 reinforcements on this turn and he can mount his force in Europe. If he does so elsewhere (Africa or North America) he is splitting up his forces. This is never the most efficient way to handle your new armies and doesn’t guarantee success. Placing them all in the Ukraine will allow him to do the most damage which will be to take out at least one continent. So the alliance with Red will necessitate an attack on the Ukraine to force his options elsewhere. If your partner Red is diligent and attacks South America, you will not have to worry about that border as much and you can focus on the European theatre to mitigate the Green threat. Have no doubt, Green will respond and if he doesn’t go in Europe, then you are better off and your ally isn’t, which isn’t bad for you either.
An alliance with Green does not provide very much in the way of short term-benefits except that it will prevent an assault from Europe and that death squad will focus else where which can benefit you as well. Eventually Green will start to fight with Red, and this can be very corrosive and work in your favor. Be sure to stay out of the fracas and just mine for cards so you can cash in late and sweep the board. One really bad thing about allying with Green in that it can create a Red/Blue alliance in response. As stated earlier, this is not acceptable. Really good diplomacy must be had here. First, you need to work on Red to get him go after South America. Then, once you have him convinced, align with Green and go to work on Europe showing you have no interest in Red’s new South American plans. You may even want to propose an alliance with Red, but do so in a way that will either put you in a really great position or force him to say no. Hopefully you have still convinced him to go after South America while also being able to align with Green. This is going be tough though.
Red still seems to be the best bet for an alliance. Green is only a threat immediately in Europe as his other armies need a few turns to get to where they are needed. Blue is a harrowing threat and putting him down is top priority. Certainly one of the maxims of Risk is to eliminate the weak, and this game is no exception. How can you entice Red? Well, first, tell Red that an alliance now doesn’t have to last forever. Put a turn limit on it or create a border treaty to entice him more. He has to know that his North America is better than your Africa so an alliance doesn’t jeopardize your immediate holdings. What it does do is create an opportunity for both players to expand and not get in each others’ way. The main immediate threat is Blue and once eliminated the immediate threat will be Green. Focus on this and show him that you are willing to do your part. Show Red you want to expand where he doesn’t and that you are willing to help him with a few of his goals, like weakening Green.
The fact that an alliance between Blue and Green doesn’t make much sense is one of the best parts of this alliance. It creates virtually no advantage for Blue/Green and as such, you won’t need to try to stop it. With the other alliances you seem to have to play hoping the other opponents don’t align or think of ways to mitigate the threat, but if you align with Red, Green doesn’t have much of a response and as such your position is stronger. This fact should be pointed out as a selling point since Red’s major concern after eliminating Blue will be Green since he is the strongest threat.
When engaging in negotiations with Red for an alliance, consider as part of the agreement a general plan: You take South America and I’ll take Europe. Set this up so it is clear and you have no problems in the future. You can add in to the treaty a border agreement over the Iceland-Greenland border but NOT over North Africa-Brazil. This might entice Red to join you as well: allow him to expand into Africa (at least diplomatically, maintain your strong military presence in North Africa by all means). If that doesn’t work, you can consider other options. Whatever option you choose, be talking about who will divvy up the spoils early on to keep the integrity of the alliance strong and follow through on that plan to the best of your ability.
Alliances can be broken and this has happened more often than one would like, so it is important that you show how willing you are to participate to accomplish the alliances goals and not just using the alliance to protect your self. Building up your reputation as a good partner in an alliance over the course of many games will also make it easier for you to make and keep a partnership. Sell yourself as loyal and show how this benefits your partners and how it has helped in the past. In the event that a betrayal occurs, Yellow and Red’s power bases are far enough away that it can be something you can overcome more easily than if you were close neighbors.
In conclusion, Red is the best alliance you can broker and you should strive to accomplish that goal. Short of reaching it, try to engender conflict between Red and Blue (with out it seeming like a major priority) and then align with Green. Blue still remains the worst option. Lesson: never align with the weakest player unless he can help you immediately. Always try to align with a strong player that can provide you with tangible benefits or else your alliance will be more of a liability than an asset.