The South African-born Pietersen caused a shock at the end of the drawn second Test against South Africa by saying he would announce whether he was standing down after the third and final match against the tourists later this month.
"It's a mess," Willis told Sky Sports television. "He's clearly got his nose severely out of joint by not being included in England's initial squad of 30 for the Twenty20 World Cup in Sri Lanka in September.
"But he also wants to play fully in the IPL (Indian Premier League) which clashes directly with England's home series with New Zealand next May. He wants to earn his $2.5 million and he is holding England to ransom."
Pietersen announced his retirement from all one-day internationals in May but a month later said he still hoped to play in the Twenty20 World Cup.
He explained that he did not really want to quit Twenty20 internationals but his England and Wales Cricket Board contract did not allow him to pick and choose between 50 and 20-over cricket.
Pietersen, named man of the match for his exhilarating 149 in the second Test against South Africa at Leeds, said on Monday he was in talks with the ECB over his future.
"It's tough being me, playing for England," the 32-year-old said.
"It's absolutely 100 per cent not about money ... there are clear things that I'm discussing but there are other issues that need to be sorted. You'll find out soon enough."
Pietersen said part of his discussions centre on his participation in the IPL where he has a lucrative contract with the Delhi Daredevils.
Asked if the third Test at Lord's could be his last, he said: "Anything's possible. It would be a huge shame. I love playing Test cricket for England but ... we'll see.
"For me the saddest part about all this is that the spectators just love watching me play - and I love playing for England."
Pietersen, whose century at Leeds was his 21st in Test cricket, passed 7,000 Test runs on Saturday. Only Wally Hammond, Colin Cowdrey and Geoff Boycott have scored more tons for England.
Mike Gatting, another former England captain, said it would be sad if Pietersen retired from the Test scene.
"I'm not sure why he wants to quit Test cricket now but that's up to KP," Gatting told Sky Sports. "He's the man that makes the decisions, nobody else.
"It'll be sad to lose him but it will also give somebody else a chance to come into the England team.
"The fellow he batted with for a little while (at Leeds), James Taylor, I'm sure he might like to play more for England, so when somebody stands down it gives somebody else another opportunity.
"At the end of the day it's about the team, what goes on in the team, not about any one individual," added Gatting.