This article examines the social and political background of escalating vio
lence between ethnic groups in south-western Ethiopia who until recently ha
d customary and ritually sanctioned ways of resolving conflict. It highligh
ts the impact of the emerging state hegemony in a local setting on ethnic g
roups not yet involved in the global political economy. The account also in
dicates the changing arenas of 'ethnic' self-definition and economic opport
unity for local groups in post-1991 Ethiopia. As the report of a big reconc
iliation meeting held between the government and the groups involved (and d
iscussed here) makes clear, in the efforts of state agents to mediate emerg
ing conflicts in conditions of increasing resource scarcity and identity st
ruggle, the use of customary mediation mechanisms and their cultural symbol
ism was rhetorically recognised. But at the same time efficient mediation w
as structurally impeded by the very nature of the exercise of authority by
the agents of the state and by their incapacity to implement practical meas
ures to establish local peace. This failure to reconstitute a new political
arena of conflict resolution was matched by the inability of the (represen
tatives of the) ethnic groups concerned to redefine their relationship in a
constructive and culturally acceptable manner.