For 35 years President Tito held together the diverse Yugoslav federation and secured peace in the region that produced the first of this century's great wars. His death at a time of sharp East-West tensions could rekindle lethal competition over what has long been one of the main fault lines of European politics.

When Emperor Diocletian divided the Roman Empire into two parts 16 centuries ago, he drew the line roughly down the middle of what is now Yugoslavia and built himself a summer palace in the middle of the Adriatic seaport city now called Split.

Ever since, this area has been the battleground between competing religions, races and ideologies. Roman Catholicism and Orthodoxy, Islam and Christianity, Hapsburg emperors and Romanov czars, Adolf Hitler, Joseph Stalin and Winston Churchill all vied for its strategic position and the soul of its people.

In response, Yugoslav nationalities have developed a pugnacious and rebellious streak, resisting invaders who sought control of the main overland route to the Middle East.

Perhaps as a result of this, the Yugoslavs have had an agile hand in nearly every major turn of European history during the past 100 years -- from the rebellions and wars that led to the redrafting of Europe's map by the 1978 Berlin Congress to the assassination of Archduke Ferdinand that sparked World War I, to the perhaps fatal delay of Hitler's campaign against the Soviet Union in 1941.

Under Tito's leadership, the Yugoslavs produced the first major schism in the world communist movement when they bolted from the Soviet Bloc in 1948 and defied Stalin's determination to control them.

Since 1948, under the shrewd and skillful leadership of Tito, they have managed to imposed a degree of cohesion on their multinational society, free themselves from foregin tutelage, and embark on the path of rapid economic and cultural development.

Whatever the shortcomings of Tito's rule, and there were many, he brought Yugoslavia to the edge of political pluralism. Aboard, his diplomatic skill secured Yugoslavia's unique standing between East and West. dThus, his death places his successors at a perilous crossroads, since it may induce Moscow to try to take back the country that defiantly escaped from its clutches.

This would present an uncertain U.S. administration with a test of its resolve to stand behind pledges to support Yugoslavia's independence, something President Carter reaffirmed yesterday by saying the United States would "do what it must to provide that support."

Although Tito remainded a Marxist-Leninist to the end of his life, he branched off on his own to develop a Yugoslav brand of socialism. In the process he traveled a long road from a merciless tyrant in the first years of his rule to the benevolent autocrat of later years.

At home, his socialism can be narrowed down to a set of practical policies -- market economy, open borders, worker self-management, and home rule for all republics and regions that constitute Yugoslavia. In foreign policy he fearlessly insisted on independence and nonalignment.

Perhaps because of these advancements, Yugoslavs from all walks of life followed with great concern the decline of his health. For them, his passing is seen as an end of an era. Although not loved, he was generally respected: after 35 years, people were accustomed to his paternalistic rule and the aura of stability he had created.

But the real source of Tito's prestige and strength was his diplomatic skill. He survived Stalin's onslaughts and took Yugoslavia out of the Soviet Bloc. His experience with the Soviets dated back to 1917, when he took part in the Bolshevik revolution (the present Soviet leaders were boys at the time), and his knowledge of Soviet weaknesses and insecurities was profound.

Tito also knew how to manipulate the Americans. He initially seized upon U.S. ignorance of the Soviet Union as a leverage of diplomacy but later found firmer grounds for a balancing act between East and West.

There are doubts among Yugoslavs that Tito's heirs will be able to perpetuate this unique position. Above all, they wonder whether the new leaders will be able to resist Soviet pressures or whether some of them might be inclined to reintroduce Soviet-style policies, even seek Soviet help to force their views on others.

Although such differences probably will not reveal themselves immediately, they are bound to surface in the coming months.

At home, the people who have adopted a Western European life style, are in potential conflict with the communist elite that sees the wave of the future in the East -- although finding advantage in some Western patterns of economic life.

On a different level, Yugoslavia's unique standing in the communist world -- a part of it yet independent and definitely not a satellite -- can expect severe testing.

The prevailing view is that it would be impossible, short of a cataclysmic civil war of direct Soviet intervention, to turn Yugoslavia into a Soviet Bloc people's democracy. But it seems equally impossible for the Yugoslavs to turn their country into a Western democracy without serious risks.

After an initial period of unity, Tito's heirs are likely to confront increasing domestic pressures for political reforms and freer expressions. They will face the need to revive a sagging economy and at the same time preserve their independent position.

Even within Yugoslavia's Communist Party there are officials who maintain that the country will have to make a basic choice between "democratic socialism as opposed to the bureaucratic socialism."

This is what makes the situation in Yugoslavia precarious at this point. As a senior official, Dusan Bilandeic, said recently, the situation in Yugoslavia is "peaceful" rather than "stable."