I know the colours are the monarchic colours of Portugal and Spain and such a flag was proposed back then among the Iberist circles.
But what about the roses? The roses were not on the original design and I can't imagine were the devs got them from and why they decided to use them. My guess it's because it was a symbol related to socialism but by the timeframe of the game it was already reduced to social democrat symbolism, which is (and was) closer to liberalism than to socialism/communism. Did the devs absolutely made it up or is there a source to it?
Also, note on personal taste: the original flag was already ugly, the roses turn it into a "sugar overdose massive destruction weapon". Still better than the monster that is democratic Iberia. Gives me nightmares.
- 1