This paper proposes a critical discussion of the political economy of hydropower construction in the communist space. We use political economy, economic history and political ecology literature in order to reveal the economic and political relations in which hydropower is embedded in socialist states. The case analysed is the Iron Gates, a joint Romanian‐Yugoslav project which raises specific questions about the techno‐political framework of the new ‘hydraulic landscape’ and its place in socialist economies and societies. The case reveals important transformations in the political and economic relations within the Soviet bloc and provides a description of the complex institutional setting used in the construction of the hydropower system. In parallel, the paper explores the contribution of political power in the construction of the Iron Gates and especially its use in connection with the ideological production of the new communist regime.