This essay analyses some of the political, economic and social challenges of East Timer's transition to independence. It scrutinizes the ethical dimensions of building peace in a territory devastated by the combined effect of Indonesia's colonial occupation and the violent militia attacks of September 1999. The most difficult task ahead does not lie in the physical rebuilding of the territory-gargantuan as it may be-but in the more intricate and long-term rehabilitation of a traumatized society. The latter involves competing Timorese factions as well as a range of international actors, including the United Nations Transitional Authority, foreign governments, business institutions and various multilateral and bilateral donors. each having their own organizational leitmotifs and policy priorities. If not managed carefully, the reconstruction process could further exacerbate existing societal tensions and complicate the starch for peace and reconciliation. The essay identifies a number of crucial components necessary to counter such risks, including the need to promote popular participation in the rebuilding process. Without the legitimacy created by strong community involvement and grassroots participation in decision making, the task of national reconstruction may well become overwhelmed by conflict.