A relation is the link or the contacts that people have with others socially or politically. Relations exist between two countries for instance. "Relations" can also describe people that you know, but if they were in your family they would be called "relatives". Relationship is the personal rapport that you have with another person such as being on good or bad terms with this person.

I think a lot of times they can be used interchangeably, but there are some examples where you would use one over the other. For example, you would say "I am in a relationship with her" but not "I am in a relation with her". Another example is "He is going to school to study public relations between Europe and America" but not "He is going to school to study public relationships between Europe and America".