The need to build legitimate and capable states in wartorn societies is now widely recognized. The Principles for Good International Engagement in Fragile States, adopted by the development ministers of major donor countries in march 2005, declares that statebuilding is ‘the central objective.’ This represents a striking break from the prevailing wisdom in the closing decades of the 20th century, when the state was widely regarded as the problem. The state has been rediscovered: it is now invoked as the solution. The policy rhetoric has changed from downsizing states to building state capacity. Yet little systematic work has been done on what the international community can and should do to strengthen the capacities of post-war states to mobilize, allocate, and spend public resources.