The possibility of an ‘arc of instability’1 across the Western Pacific states of Papua New Guinea, Solomon Islands, Vanuatu and Fiji carries serious security concerns for the entire Pacific region. This paper examines Australian-led interventions in Papua New Guinea and the Solomon Islands to analyse the effects that they are having on the concept of sovereignty, both for states in the Western Pacific region and for international relations more generally. It argues that the nation-state ideal is under severe strain and that failed states are symptomatic of a wider problem of legitimacy, caused in part by the liberal assumption underpinning the social contract that entail one the one hand protection and on the other service delivery. As many states fail in this respect of delivering the political goods — rule of law, security, infrastructure, medical care and civil and human freedom — the notion of sovereignty has now been exposed for the fiction it has essentially been for most states, at least in the 20th century. If states cannot provide then intervention and state reconstruction marks a return to the nation-building project that characterised post WWII international politics. It also invites questions of diminished sovereignty and forces a reassessment of the capacity of states to meet the expectations of their citizens. It may be that the time has come to think beyond state sovereignty as the basis of international order and to return to imperial or semi-imperial constructs, particularly forms of indirect rule, to guarantee global human security. If states are failing then sovereignty is expendable.