What happens when the state'svision and expanding reach bring it into contact withtraditional value systems and governance structures? In whatcircumstances can the distribution of resources in a fragilesociety prevent-or exacerbate-conflict within and betweencommunities? How do state expansion and public spendingimpact upon societal expectations of the state and statelegitimacy? This report examines these questions through thelens of access, claiming, and decision making ingovernment-sponsored community development programs. Thefindings illustrate the hurdles faced by government anddevelopment actors operating in pluralistic societies, andprovide input on how local governance and decision makingmight be incorporated to enrich programming. This reportaims to provide the government of Timor-Leste, particularlythose responsible for decentralization, communitydevelopment, and local governance planning, with informationto inform their determination of an appropriate mix ofmodels for local development. The relative priority thegovernment will ultimately give to these different models,partly a trade-off between speed and depth, will impact onthe way in which development and local governance areunderstood and taken on board by rural communities. Thisreport finds that the achievement of the dual goals of statelegitimacy and sustainable, effective local developmenthinges in large part on the willingness of state officials(and the donors that support them) to engage productivelywith communities and locally legitimate customary systems of authority.