Theories and practices of international aid have stressed the need for the full participation of recipients. This approach has been strengthened by international agreements such as the Paris Declaration on Aid Effectiveness in 2005, which called for ‘ownership’ of development strategies by recipient agencies. This seemed to promise recipient governments an increased stake in the way aid was used for development and poverty alleviation. However, in practice, the new aid agenda has actually increased demands on recipients with new conditions over the management of aid funds, the setting of development strategies and the meeting of other global obligations. This issue is of particular concern in small Pacific Island states where the small size of government is coupled with increasing demands from donors for consultation, accountability and engagement to create what we argue is an ‘inverse sovereignty’ effect: despite the rhetoric of ownership and independence, recipient states are actually losing control over their development strategies, policies and programmes.