We were in Madrid last week. I don’t know what my colleagues expected, but reading all the stories in the media about Spain having a 20%+ unemployment and so many stories about the Indignados’ protests somehow led me to expect a country on the verge of a civil war.

Instead of which, we found a country with signs of affluence all around – from flashy and new cars to big office blocks, banks and shops selling branded goods. It was even hotter than here and still people went about their work, like they do everywhere (actually, in Spain they seem to walk even more than we tend to do).

As for the Indignados, the Spanish papers reported huge demonstrations on Sunday and a march that is taking place from Valencia and other cities towards Madrid in the coming days.

I went down to Puerta del Sol, the centre of the previous Indignado protests and yes there was a certain air of expectation around, although the only visible signs of the protests were two huts with posters and protest merchandise. People were milling around and a couple of police officers who wanted to know what two troubadours were up to (they were collecting money for a website) were booed when they left.

If you talk to ordinary Spanish people holding down ordinary jobs, they readily admit the economic difficulties their country is passing through but then they also tell you they still cannot understand where the Indignados want to go. In fact, the group leaders on Sunday used rhetoric redolent of the anti-globalisation and anti-EU streams.

Whether the Indignados will become the next Tahrir Square leaders is still to be seen. There is certainly a huge difference between Tunisia and Egypt and a country of acknowledged democratic credentials such as Spain. Snazzy comparisons between Facebook-led young activists in Tahrir Square and in Puerta del Sol can lead to facile and hurried conclusions that are neither here nor there.

On to the real weak point of Europe on the other side of the sea – Greece – and what was decided over the past hectic days in Brussels and Frankfurt.

Before the EU summit, one could read reams of dire predictions about Europe, the EU and the euro. You can still find respected economists such as Samuel Brittan say ‘Greece’s euro exit can now only be a matter of time’.

The previous week, Greece looked like going under, under the pressure of riots on the streets, a government in dissolution, that the beleaguered prime minister held last chance talks with the Opposition to try and form a national government.

Then, suddenly, the government survived. A reshuffle brought a new minister to Finance and the Leader of the Opposition was roundly shouted at during the EPP meeting (with Prime Minister Gonzi present) for not coming on board with an austerity plan to redress the damage his own party did when it was in power, not so many moons ago.

Is Greece out of the woods? Not by a long chalk. Maybe the riots on the streets had a point though, that a government strategy based on austerity only cannot work. There must be incentives as well, to get the country to do the reforms which can only improve the economic situation and bring about, hopefully, some growth as well.

Up till last week, and maybe even now, there are still voices in Europe which say that the Greeks are fundamentally lazy and shirkers and should be allowed to sink. Just as the people in the north of Italy say about the people who live south of Rome.

But such is the linkage in Europe that even though Greece is not too big to be allowed to go, any default by Greece would hurt the rest of Europe. The two boxes on this page show the amount of exposure that countries in Europe have with regards to Greece and the extreme way in which some banks in Europe cheerily lent to Greek banks or bonds knowing full well there was never any hope of the money being recouped.

It is thus very true, what the Indignados say, that the people whose wages and pensions are being cut are in fact paying for reckless and irresponsible lending practices by some banks. It is thus also very true what Angela Merkel and her minister Schauble have been saying, that private bondholders must share some of the pain of the reconstruction.

All through this crisis there have been voices saying the euro is doomed and was a bad idea to begin with. We can now see very clearly that the euro project was an incomplete one, for you cannot have a currency without an underlying fiscal policy. In fact, all that is being done to get the euro to survive is pushing us in the direction of an ever closer eurozone.

The basis of the single currency, what we know as the Maastricht criteria, cannot be focused upon only to check that a country can join the euroclub but must be enforced regardless whether the miscreant is small or big. When France and Germany openly infringed the limits no one dared tell them, so Greece went along and did what the big boys had done with impunity.

The countries in the eurozone are learning some difficult and important lessons, well knowing that we are here today without seeing everything collapse around us just because we have been rather lucky. We could easily have gone under, a country or two could well have defaulted and the entire eurozone collapsed on top of our heads.

Many countries – I point at Iceland, the Baltic states, Ireland, maybe Portugal, and maybe Spain, not Greece so far – have learned painful lessons but there is a general awareness that lax controls can bring about painful recessions where people can get really hurt. The ministers at Ecofin meetings are generally more careful about taking the assurances they are given at superficial meaning. So too with the ECB and the Commission.

Maybe seen from Washington, Europe is still a shambles where ministers spend far too much time discussing and disagreeing before doing anything, and when they do it, it is usually in a diluted manner.

But it’s coming up to three years now from the terrible September of 2008 when the world really looked like it was about to collapse. Three years down the road, the euro has not collapsed even though it is still coming to grips with the structural problems that almost hobbled it. Lessons have been learnt and corners turned. The threat of a double-dip recession is still there, but it looks somewhat remote today.

Maybe Spain can serve as an object lesson on Europe 2011. You look around you and people tell you the 20% unemployment figure is a fiction – many people work but it’s work in the black economy. Just like what happens anywhere, even here.

And the plane from Madrid was absolutely full of Spanish people coming to spend their euros in Malta. Maybe at least some of them were from that 20% too.

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