In September 2005 Papua New Guinea (PNG) celebrated 30 years of independence from Australia. Despite greater Australian control over foreign aid spending in its former colony since the late 1980s, the Australian government still fears ‘state collapse’ in PNG. Framing its concerns in such a fashion assumes that there was a time when the state in PNG ‘worked’ in the same way as developed states. Australia practised paternalistic colonial policies before 1975, and independence was thrust upon PNG rather than achieved as the result of the efforts of an organised nationalist movement. Nation-building in PNG has been problematic from the outset, with a linguistically diverse population and no significant nationalist sentiment or structures on which to build. In the past decade neoliberal economic policies promoted by Australian policy makers and international lending agencies have tried to force the government and economy to be more efficient. Slowing growth, increased unemployment, rising crime rates and the apparent inability of the PNG state to reverse these trends led Canberra to force the PNG government to accept an ‘Enhanced Cooperation Program’ (ECP) to shore up the PNG state and reverse its predicted demise. The ECP raises questions over the success of nation- and state-building in PNG, as well as the degree of actual sovereignty enjoyed today by PNG.