It is 1865. McClellan won the 1864 election after Sherman failed to take Atlanta. The Copperhead faction of the Democratic Party has driven him to seek a negotiated peace with the Confederacy in spite of his promise to continue the war. He offers a ceasefire and the status quo ante, but the South is not interested; for the Confederacy, after all of its losses, it is complete independence or nothing. Under enormous pressure to end the war, McClellan gives in. What happens next?
It would have been very difficult to negotiate a meaningful peace for two reasons: the border states and the territories. The only obvious answer to the border state question would have been a series of referenda, which inevitably would have turned each of them into a Kansas-style battlefield. As to the territories, most of them were physically unsuitable for cotton plantations, but the Confederacy could not have conceded that point without implicitly admitting that the ostensible reason for the rebellion–Lincoln’s position on extending slavery in the 1860 election–was bogus.
In all likelihood, if the two parties had somehow reached an agreement, the outcome would have been continuing strife, miniature civil wars on the borders, and an ever-increasing disparity in population growth and power between the Union and the Confederacy. The South would have been penned into the borders of the Confederacy. The rest of the world had already learned to live without its cotton. Its political system granted too much power to the individual states to be effective, and its infrastructure was in ruins. In the long run, the Confederacy was doomed, regardless of what happened in 1864 and 1865.