Considerable effort in recent years has gone into rebuilding fragile states. However, the debates over the effectiveness of such state-building exercises have tended to neglect that capacity building and the associated good governance programmes which comprise contemporary state building are essentially about transforming the state â€” meaning the ways in which political power is produced and reproduced. State capacity is now often presented as the missing link required for generating positive development outcomes and security. However, rather than being an objective and technical measure, capacity building constitutes a political and ideological mechanism for operationalising projects of state transnationalisation. The need to question prevailing notions of state capacity has become apparent in light of the failure of many state-building programmes. Such programmes have proven difficult to implement, and implementation has rarely achieved the expected development turnarounds or alleviation of violent conflict in those countries. In this article it is argued that, to identify the potential trajectories of such interventions, we must understand the role state building currently plays in domestic politics, and in particular, the ways in which processes of state transformation affect the development of different and often conflicting power bases within the state. This argument is examined using examples from the Australian-led Regional Assistance Mission to Solomon Islands.