The war between the Government of Sudan, dominated by an Islamist party, and the Southern Sudanese rebels has been one of the longest-lasting conflicts in Africa (1983-2005). In the Comprehensive Peace Agreement, the Government of Sudan conceded to the inclusion of the South Sudan rebels, the SPLM, in the National Unity Government, as well as to the granting of considerable autonomy to this region and half of revenue from oil produced on the latter's territory. 2011 will see a referendum in South Sudan, where its population will decide whether to remain as a part of Sudan or to declare independence in 2012. Free elections, the first for many years, are scheduled to take place in Sudan in 2009, which may result in the Islamist National Congress Party, which has been ruling in Khartoum since 1989, losing its grip on power. The article analyses the current implementation status of the Comprehensive Peace Agreement, as well as the Government of Sudan's policy, which is delaying the resolution of the key issues. The author also describes the political, military and economic challenges facing the autonomous Government of South Sudan which, if not resolved, may lead to the emergence of another failed state in Africa.