At the time, arranged marriages were the common way in which royalty wed, and Spanish kingdoms were powerful and rich. Spanish Princesses were popular to wed all over Europe because of their enormous dowries and - most importantly - the strong alliances, which meant the following: Let's say a British king had a princess of Aragon for a wife. In case of a war with, for example, France, England could surely count on Aragon's Alliance and support in a war. (let's keep Henry VIII out of this- he made a major faux-pas ruling-wise when he broke off with his Spanish queen and the Catholic Church, leaving him with no support from Aragon whatsoever)

Unfortunately they did not stress this fact in the film, making it hard to understand why the Grand Duke was stressing so hard for the prince to marry princess Chelina.