State of country? Essentially damnable! (7)
I believe the answer is:
indiana
'state' is the definition.
(US state)
'country? essentially damnable' is the wordplay.
'country?' becomes 'India' (India is an example).
'essentially' says to take the centre.
The middle of 'damnable' is 'na'.
'india'+'na'='INDIANA'
'of' acts as a link.
(Other definitions for indiana that I've seen before include "Gary's place" , "State between Illinois/Ohio" , "Character associated with the Temple of Doom" , "State of central US" , "___ Jones, action hero created by George Lucas" .)