My friends, the choice is simple.
The Dwarves represent an organized, powerful and very real threat to our way of life. Should they choose to make war, the outcome will be at a supreme cost, and the victor uncertain. Of our two targets, failing to include these foes is a deadly mistake.
As for the secondary target, I believe the goblins would be a wise choice. Despite their relatively weak structure, they will, even with the best of efforts, be an eternal nuisance. Their usefulness, even if the can be domesticated, is merely theoretical. In all likelyhood, they are far too outside the realm of the proper Elvish forms to ever be deemed worth so much of an investment on our part. As such, they are at best, a liability, should we leave them.
The humans, unpredictable as they may be, are close enough that we can manipulate them, and perhaps, in time, reform them, showing them the proper way of things. Even in the meantime, they are reasonable enough to be of use to us.
I think our choice should be clear.