Spain (Spanish España), parliamentary monarchy in southwestern Europe, occupying the greater part of the Iberian Peninsula, and bounded on the north by the Bay of Biscay, France, and Andorra; on the east by the Mediterranean Sea; on the south by the Mediterranean Sea and the Atlantic Ocean; and on the west by Portugal and the Atlantic Ocean. The British dependency of Gibraltar is situated at the southern extremity of Spain. The Balearic Islands in the Mediterranean and the Canary Islands in the Atlantic Ocean off the coast of Africa are governed as provinces of Spain. Also, Spain administers two small exclaves in Morocco—Ceuta and Melilla—as well as three island groups near Africa—Peñón de Vélez de la Gomera and the Alhucemas and Chafarinas islands. The area of Spain, including the African and insular territories, is 505,990 sq km (195,364 sq mi). Madrid is the capital and largest city.