In the third variant of the model, we assess how the risk of renewed civil war would be affected by a process of democratization of Sudanese politics (including the 2009 elections). Democratization is shown in the model to provide a useful commitment device and to resolve some of the credibility issues that are currently contributing to excessive militarization by both sides, resulting in the possibility of unwanted and unintended conflict. The reduction in the equilibrium level of military expenditure associated with democratization would free resources to be spent on development, represented by the MDGs. Our simulations suggest that the payoff for both peace and development in the Sudan could be very large. First, large savings can be achieved by even modest reductions in military expenditures; and, second, the returns of expenditure on the social sector is likely to generate significant progress in terms of the MDGs targets, given the very low standards of human development in Sudan, especially in the South. Democratization is also likely to have much more significant impact beyond its positive influence associated with reduced military expenditure. A genuine democratic transformation might actually make unity attractive to Southern Sudanese; and even if the latter opted for partition, the two emerging democracies are likely to assign a higher value to economic interdependence and cooperation than any payoffs that might be reaped by conflicts and war. Moreover, democratization may be a precondition for a range of other initiatives that have been proposed for enhancing economic interdependence and cooperation.

Finally, we explore a range of initiatives for peaceful coexistence and cooperation and demonstrate how these extensions alter the payoffs for both sides. These include enhanced economic inter-dependence through the oil sector, trade, accommodations for nomadic northern Sudanese tribes and Southern Sudanese living in the North; a cooperative Confederal option; and a neutral Abyei zone as an investment in peace.

The fundamental implication of our model is that increasing, unsustainable and dangerous militarization is a rational response to the status quo and will continue so long as there is no progress toward democratization. Genuine democratic transformation may be a necessary condition for credible commitments from both actors even if it is only for the pragmatic goal of preventing conflict and war between the two emerging Sudanese states. Likewise, following on signals from the SPLM, it appears that there is little chance for the more ambitious goal of a united Sudan without a genuine democratic transformation leading to a more democratic federalized political order entailing substantial realignments of political and economic powers towards the South and other marginalized regions of Sudan. This assessment has far reaching implications for the international community’s approach to the peace processes in Sudan, be they north-south or Darfur. We contend that the international community should promote a wider process of political dialogue in the country as increased political enfranchisement may be the only way to build missing credibility in the commitment to peace from both Khartoum and Juba 4