After setback, Aleutians’ leader appreciated capturing Northern islands (5)
I believe the answer is:
tonga
'islands' is the definition.
(nation made up of several islands)
'after setback aleutians' leader appreciated capturing northern' is the wordplay.
'after setback' is a reversal indicator.
'leader' indicates taking the first letters.
'appreciated' becomes 'got' (get can mean to appreciate or understand).
'capturing' is an insertion indicator.
'northern' becomes 'n' (abbreviation e.g. N. Ireland).
The initial letter of 'aleutians' is 'a'.
'a'+'got'='agot'
'agot' enclosing 'n' is 'agnot'.
'agnot' back-to-front is 'TONGA'.
(Other definitions for tonga that I've seen before include "SW Pacific monarchy" , "Pacific island state" , "Polynesian monarchy, member of the Commonwealth" , "Island nation" , "two-wheeler" .)