Tito’s Yugoslavia was communist, but it wasn’t Soviet communism; you’ll find no statues of Lenin or Stalin here. Despite strong pressure from Moscow, Tito broke away from Stalin in 1948 and refused to ally himself with the Soviets — and therefore received good will (and $2 billion) from the United States. He ingeniously played the East and the West against each other. He’d say to both Washington and Moscow, “If you don’t pay me off, I’ll let the other guy build a base here.” Everyone paid up.
Economically, Tito’s vision was for a “third way,” in which Yugoslavia could work with both East and West without being dominated by either. Yugoslavia was the most free of the communist states. While large industry was nationalized, Tito’s system allowed for small businesses. Though Yugoslavs could not become really rich, through hard work it was possible to attain modest wealth to buy a snazzy car, a vacation home, Western imports, and other niceties. By some GDP and other economic measures, Yugoslavia was at times more prosperous than poorer capitalist European countries like Italy or Greece. This experience with a market economy benefited Yugoslavs when Eastern Europe’s communist regimes eventually fell. And even during the communist era, Yugoslavia remained a popular tourist destination for visitors from both East and West, keeping its standards more in line with Western Europe than the Soviet states. Meanwhile, Yugoslavs, uniquely among communist citizens, were allowed to travel to the West. In fact, because Yugoslavs could travel relatively hassle-free in both East and West, their “red passports” were worth even more on the black market than American ones.