This article critically reviews the Aga Khan Rural Support Programme (AKRSP) in light of Joseph Stiglitz’s ‘new development paradigm’ (NDP). Based on the analysis of the pioneering participatory development strategies applied by the AKRSP in Gilgit-Baltistan, Northern Pakistan, the NDP is used to highlight a number of issues. I argue that an emphasis on social legitimacy and the political sphere as a realm for political debate and action can clarify relationships between funders, projects and communities, and contribute to the ground assessment of the impacts of the AKRSP on local communities. Raising issues about accountability and transparency, and questioning the robustness of political relations towards which the NDP works, I conclude that the AKRSP’s participatory development model may, contrary to the rhetoric of empowerment inherent to the concept of participatory development, in fact lead to the effective weakening of political rights.