Maciej St. Zieba and I got into a discussion of the origins of the words Spain and Iberia. Spain is not so hard to explain as it derives from the Latin Hispania. Iberia is a bit trickier.
Here is what Maciej found in his Heritage Illustrated Dictionary of English Language:
Iberii = inhabitants of the peninsular:
Maybe related to Celtic: Iveriuu – old name of Ireland ( gr. ‘Iernee > lat. Hibernia)
Maybe related to AArya (noble, hence: Indo-European as opposed to other “barbarian” ) > old Irish: EEriu, and > Perian: Iran (double vowel letters stand for vowel-macron)
Also remember: “Ebro” = in Latin: Iberus (many nationalities’ names were derived from topographic names)
take into consideration there were two “Iberia” – one in Spain another one in Georgia (Caucasus)
Many years latter I found some additional information in Waterson (2010). According to Waterson the Latin word “Hispania” is derived from a Phoenician phrase “I-shephan-im” (“the island of the hyraxes”). Wikipedia: Hyrax says the Phoenician origin in controversial. Waterson says “Iberia” is a Greek word related to the Ebro river.
Waterson, P. (2010 July). Dertosa – the Cannae that Failed. Slingshot, 271, p. 2-8.