Italy's Much-Mocked Finance Chief May Get Last Laugh on Budget

(Bloomberg) -- Italy’s populist rulers love to beat up on 70-year-old Finance Minister Giovanni Tria for resisting their efforts to buck European spending rules. But the slight, unassuming economics professor, who’s been parodied as a hapless hostage on TV, may get the last laugh.

Despite frequent reports that Tria is considering quitting in frustration at the abuse he gets from coalition colleagues, the minister is committed to striking a compromise that will be acceptable to populist leaders while keeping Italy in good standing with the European Union. Failure to reach a deal could roil financial markets and eventually lead to fines from the bloc.

Italy's Much-Mocked Finance Chief May Get Last Laugh on Budget

Backed by establishment figures and pressure from investors, Tria has been quietly lobbying deputy premiers Matteo Salvini and Luigi Di Maio to yield to EU demands they curb the spending plans that helped them get elected. Their current budget foresees a 2.4 percent deficit next year, which Brussels finds unacceptable, while Tria has been arguing for a maximum of 2 percent, according to two senior officials in Rome who asked not to be identified discussing private conversations.

Television comic Maurizio Crozza has picked up on Tria’s obvious isolation within the administration to portray him as a desperate, bumbling minister who clearly doesn’t believe a single word he’s forced to tell reporters.

But behind the scenes, the real finance minister has been reaching out to European Economic Affairs Commissioner Pierre Moscovici to lay the groundwork for the deal that may avoid a showdown with the EU, according to an adviser and longtime friend, Pasquale Lucio Scandizzo.

Italy is now “on the right path” toward crafting a solid budget, Moscovici said Friday. “I want to avoid a crisis between the European Union and Italy.”

Building on previous reports, Corriere della Sera said Saturday that Tria is increasingly isolated by coalition government partners.

Establishment Allies

Tria, a first-time minister in a country that’s had 66 governments since World War II, needs a thick skin -- he’s a key representative of the career civil servants and political old guard trying to steer the country through the minefield of a populist administration.

Tria’s advantage in negotiating is that “he never gets carried away by emotions,” Scandizzo said. “He’s determined, calm and cold-blooded.”

Angered by years of economic stagnation, a wave of immigration from North Africa and a general sense of decline, voters ditched the traditional parties in March’s election in favor of Salvini’s anti-migration League and Di Maio’s anti-establishment Five Star Movement. Their tussle with the EU has whipsawed financial markets for weeks.

The new government’s biggest test is its first budget, which Salvini and Di Maio need in order to start delivering on their election promises. But a spending push to pay for welfare benefits, lowering the retirement age and tax cuts has been rejected by officials in Brussels for violating the union’s budget rules.

Compromise Candidate

Back in May, when the new government was still being formed, Tria emerged as a compromise candidate to resolve a standoff when President Sergio Mattarella refused to name a euroskeptic, Paolo Savona, as finance minister. Savona himself suggested Tria, which was good enough to convince Five Star and the League, people familiar with the matter said.

The backbiting hasn’t been easy on the septuagenarian. In a text message that Il Giornale newspaper said Tria had sent a friend, the minister said he can’t take the pressure of “being subjected to one ambush after another” anymore. But he also said that he’s committed to a single objective: “saving the country.” When asked about that report in Venice on Friday, Tria told reporters: “There is no message.”

Italy's Much-Mocked Finance Chief May Get Last Laugh on Budget

Tria has repeatedly denied reports that he intends to resign either right away or after he gets a budget deal done by the end of December. Those claims have surfaced with some regularity since his first month in the cabinet.

“I’m not masochistic, putting up with the budget to then resign afterwards,” Tria said after one such report, in October.

Populist Orders

A few weeks earlier, Di Maio all but ordered Tria to find the money needed to pay for the election promises of the political upstarts now running Italy. “Italians who are in difficulty can’t wait,” the deputy premier said at the time. “A serious minister must find the money."

Tria isn’t alone in his defense of political moderation. Flanking him are several figures working behind the scenes to keep Italy’s finances and its relationship with the EU on a more even keel -- the likes of President Mattarella, Bank of Italy Governor Ignazio Visco and Foreign Minister Enzo Moavero Milanesi.

Italy's Much-Mocked Finance Chief May Get Last Laugh on Budget

Both an economist and a law graduate, Tria has years of experience advising senior government officials, giving him an extensive network of contacts throughout the civil service. As a former president of the Italian National School of Public Administration, he’s the ultimate bureaucrat, a counterweight to the prevailing populism, according to Luigi Paganetto, his predecessor as the dean of the economics faculty at Tor Vergata University.

“Knowledge of public administration is the single thing that usually sets the bureaucrats apart from the politicians,” Paganetto said.

There’s still plenty of work to do before both Rome and Brussels reach a consensus on Italy’s first populist budget, but Tria hasn’t lost his sense of humor about the position he finds himself in. He said it was “exhilarating” to watch his television alter ego shaking his head and rolling his eyes as he struggles to answer reporters’ questions.

“I couldn’t help laughing,” he said.

©2018 Bloomberg L.P.