The article is based on sociological research into local government in areas under reconstruction, including the town of Petrinja and four surrounding villages. Research was carried out in 1996 and 1997. The authors started from the hypothesis, which has been proved in world literature, that local government is important, and that its importance grows with a lower level of development, and greater problems of life quality. Reconstruction is certainly a problem of this kind. The basic hypothesis was that the twin system of local government and reconstruction is organized hierarchically, which prevents the inhabitants/returnees from influencing the elementary conditions of their life and reconstruction through the normal chain of territorial organization. This leads to social anomy and unfinished reconstruction. Unfortunately, the results confirm this hypothesis. Problems of the global system loom over local government: the economic collapse, the impossibility of finding a job, of earning money and organizing life in a war-struck area. It thus seems, for the present at least, that the reconstruction of this area has not succeeded, both in the socio-economic sense and in issues of democratic development.