(1) Very briefly: In 1980 two things happened. Tito died and the international debt trap (credit crisis, "debt crisis") snapped. As many other dependent countries, Yugoslavia had got indebted, because of a mixture of taking the opportunity of a favorable situation (low real interest rates), hopes in a catching-up development, and international creditors that actively and negligently sold credits due to enormous international availability in the 1970s. (Global recession had made investments in the productive sector less profitable which made more money available in the financial sector. Oil producers earned more income following their concerted price policy.)
In 1979 US policy made interest rates explode from one day to the other, and credits scarce and expensive. The International Monetary Funds (IMF) represented creditor countries in order to secure repayments. It forced conditionalities of a one-policy-fits-all type on debtor countries. Agreements with the IMF aimed at keeping up repayments of credits. SFRY kept paying its debt even in the harshest situation and during the beginning of disintegration in its last year of existence. Beside causing poverty and de-industrialization, IMF policies intended constitutional changes: re-centralization of decision making power to the federal state (and the central bank).
Unfortunately for Yugoslavs, the new constitution of 1974 faced a full reality check only after Tito's death. And this was a time of crisis. Up to then, the power of the League of Communists had not vanished (with a structure that allowed – other than the constitution – simple majority decisions), and Tito himself had an especiallypowerful role, in the League of Communists and as Yugoslav president for life-time.
The 1980s witnessed a broad discussion on how to build a new constitution. The political framework (domestically and internationally) made adaptations necessary but the republics and provinces had too much power to let go. The rich northern republics prepared to leave SFRY. The confrontation within the Republic of Serbia (Kosovo) escalated.
(2) The Austrian Foreign Secretary at that time, Alois Mock, who was known for his support of Slovenian and Croatian interpretations, could "not comprehend" the causality of critics, that predicted an escalation of the conflict if (early) recognition was conceded. Denial of recognition would rather, so Mock, "encourage the Serb-dominated army in its policy of conquest". (Possaner 1991)
Robert Howse, Canadian scholar of international law who worked in the Canadian embassy in Belgrade in the 1980s, described the implications:
"The concern with "rewarding aggression" that one frequently hears in discussions of the Bosnian situation is understandable, given that the recognition of Bosnia (in my view, one of the greatest errors in the entire international response to the crisis) seemed to imply that the borders of this newly independent state represented a kind of legitimate status quo ante disturbed by Serb and Croatian aggression. It is perhaps time to admit the error of the West (and the international community more generally) in providing recognition to the breakaway republics without confronting the difficulty minority problems that raised in all but the Slovenian case." (Howse 1995: 10c.)
Many supporters of a quick recognition of Slovenia and Croatia displayed an ignorance towards a feasible reintegration concept for the remains of Yugoslavia. The fact that they succeeded does not mean that there were no alternative proposals in 1991. The Dutch Government that had the EC chair in the second half of 1991 appears to have put forward to its fellow EC members a proposal that stated "the principle of self-determination e.g. cannot exclusively apply to the existing republics while being deemed inapplicable to national minorities within those republics".
It called "for a comprehensive solution which involves all republics and the federal government [of Yugoslavia, R.W.]" This proposal to open the possibility to redraw Yugoslav domestic boundaries was rejected by the other EU-members. (Owen 1996: 2cc.)
Others, like the Austrian industrialist Josef Taus (Austrian Christian-Conservative Party, OeVP) and the Austrian Social Democrat Peter Jankowitsch sensed the "anachronism of a drifting apart of Yugoslavia in a phase of general integration efforts". (Bacher-Dalma 1991)
(3) The International Crisis Group, an organization which has important players of the "international community" on its board, made this point clearly in a report from 2001: "The former SFRY constitution, confusingly, also referred to the location of sovereignty in the constituent peoples that made up the SFRY. However, this latter definition was explicitly rejected when the European Community chose to recognise only the right of former Yugoslav republics to exercise their sovereignty, and not peoples." (International Crisis Group 2001)