The Iberian Union was a state that governed the Iberian peninsula between 1580 and 1640. After the young king of Portugal and his uncle died, three of their relatives fought the War of the Portuguese Succession. Philip II of Spain won, thus linking the monarchies of Portugal and the Spanish branch of the House of Habsburg. This dynastic union joined the crowns of Castile, Portugal and Aragon along with their respective colonial possessions, under the rule of the Hispanic monarchy. The institutions, government and legal traditions of each kingdom remained independent of each other; they merely had the same king of Habsburg Spain. The alien laws (Leyes de extranjeria) determined that the national of one kingdom was a foreigner in all the other Iberian kingdoms. The term Iberian union was not used at the time, it is a creation of modern historians.
The monarchs had long wanted to unify the penisula: They had the visigothic monarchy in mind. Sancho III of Navarre and Alfonso VII of León and Castile both took the title Imperator totius Hispaniae, meaning "Emperor of All Hispania" centuries before. If Miguel da Paz (1498–1500), Prince of Portugal and Asturias had become king, the union could have been achieved earlier. However, he died early in his childhood.
The history of Portugal from the dynastic crisis in 1578 to the first House of Braganza monarchs was a period of transition. The Portuguese Empire's spice trade was peaking at the start of this period. Vasco da Gama had finally reached the East by sailing around Africa in 1497–98, completing the exploratory efforts started by Henry the Navigator. This opened an oceanic route for the profitable spice trade into Europe that bypassed the Middle East.
Throughout the 17th century, the increasing predations and surrounding of Portuguese trading posts in the East by the Dutch, English and French, and their rapidly growing intrusion into the Atlantic slave trade, undermined Portugal's near monopoly on the lucrative oceanic spice and slave trades. This sent the Portuguese spice trade into a long decline. To a lesser extent the diversion of wealth from Portugal by the Habsburg monarchy to help support the Catholic side of the Thirty Years' War, also created strains within the union, although Portugal did benefit from Spanish military power in helping to retain Brazil and in disrupting Dutch trade. These events, and those that occurred at the end of Aviz dynasty and the period of Iberian Union, led Portugal to a state of dependency on its colonies, first India and then Brazil.
- Indicaciones sobre la investigacion "Ciudadanía, identidades complejas y cultura política en los manuales escolares españoles".Centro de Investigación MANES
there is consensus among professional historians that the most adequate term is Hispanic monarchy
- The "Spanish Century"
- Manuel Álvarez-Valdés y Valdés (1992). La extranjeria en la historia del derecho espanol. Universidad de Oviedo. p. 151. ISBN 978-84-7468-737-8.
- LA CONDICIÓN JURÍDICA DE "ESPANOL" COMO PRODUCTO DEL DERECHO INDIANO
- DEBATE SOBRE LA IDENTIDAD DE ESPAÑA. El Mundo
- Notice that, before the emergence of the modern country of Spain (beginning with the dynastic union of Castile and Aragon in 1479, followed by political unification in 1516), the Latin word Hispania, in any of the Iberian Romance languages, either in singular or plural forms (English: Spain or Spains), was used to refer to the whole of the Iberian Peninsula, and not exclusively, as in modern usage, to the country of Spain, thus excluding Portugal.