And he noted that Greece's progress has clearly slowed as the recession drags on, unemployment has soared to 22 percent, and many Greeks are struggling under the cost cuts and tax hikes imposed in exchange for the rescue.
"Anybody who would say we cannot renegotiate the MoU is delusional," he said. "If you were not to change the MoU, we would be signing off on an illusion."
But it's unclear if any renegotiation would go that smoothly. Germany — whose economy is the largest of the 17 countries that use the euro — has held a firm line in recent days, saying it wants Greece to continue to use the euro, but that it must hold up its end of the bargain.
Chancellor Angela Merkel said on the sidelines of the G-20 summit in Mexico on Monday that "we have to count on Greece sticking to its commitments" and that "no departures can be made from these reform measures."
She didn't address whether Greece could be given more time, and officials in Berlin avoided committing themselves to that.
Germany's position reflects voter concerns at home: Its government is footing a large part of the bill for Greece's rescue, and it needs to be able to show its citizens that Greece is taking the right steps to ensure it can pay down its debt and never ask for another bailout.
Spain paid sharply higher interest rates in a short-term bill auction on Tuesday, highlighting growing investor concerns that the country might eventually need a bailout itself. The Treasury raised €3.39 billion ($4.28 billion) in 12- and 18-month bills — more than its upper target of €3 billion —but its borrowing costs skyrocketed.
The auction — together with the fact that Spain's borrowing costs on its 10-year bonds remain above at 7 percent — show that markets are deeply skeptical about whether the country will be able to manage without a bailout like the ones received by Greece, Ireland and Portugal's. It also highlights doubts about Europe's ability to contain and end the crisis.
Marc Ostwald of Monument Securities said that while Spain met its sale target for the debt auction on Tuesday, "the yields at which these were sold can only be described as prohibitively expensive."
Spain is bigger than the three bailout countries combined, and would stretch the eurozone's €500 billion bailout fund if help were needed. Worries about Spain's ability to repay its debt grew last week when the country agreed to accept a eurozone loan of up to €100 billion to shore up its ailing banks, which are sitting on massive amounts of soured real estate investments.
Spain not only needs a eurozone rescue package for its banks but "an outright bail-out package," Ostwald added. "It is becoming very difficult to see how it can manage without that beyond the end of the third quarter, unless yields fall dramatically!"
Italy has also been caught up in concerns that it might soon be able to keep a lid on its debt without help. Its economy is the third largest in Europe, after Germany and France, but it has a massive amount of debt. The worry is that if Italy's economy continues to slow, it won't be able to maintain its debt. Italian borrowing costs Tuesday were at 5.79 percent — while Germany's stood at 1.53 percent and France's were 2.56 percent.
— FINANCE MINISTERS' MEETING
In addition to wrangling over Greece's bailout terms, the eurozone finance ministers meeting in Luxembourg on Thursday are expected to discuss how best to help Spain and Italy deal with soaring borrowing costs.
At the moment, the debate centers on whether to take the drastic step and push for a stronger banking, fiscal and political union across Europe in order to rescue the single currency. But there are concerns, especially in Germany, that this is a long-term solution and can't be rushed into.
Analysts also warn that while fiscal union may solve the larger question of governments spending beyond their means, it will not address the immediate concerns of countries struggling to pay tomorrow's bills.