This article examines the intricate process of developing the European Union's Water Framework Directive. It sees the Directive as a response to recent economic, political and social changes related to water management, including the shift from government to governance, the liberalization of water markets and the emergence of a new set of institutions, actors, etc. and their respective relations (i.e. social capital). The article focuses on the key points of disagreement between the Council of Ministers and the European Parliament that threatened to prevent the Directive from being materialized and interprets this controversy as the culmination of conflicting interests between different actors at the local, national and European levels. Finally, it asserts the increasingly important role of the nation state in the decision-making and implementation of the Directive and sets this against recent arguments about the death of the State.