Country established close to Iowa (7)
I believe the answer is:
estonia
'country' is the definition.
(European country)
'established close to iowa' is the wordplay.
'established' becomes 'est' (abbreviation).
'close' becomes 'on' (I've seen this in other clues).
'to iowa' becomes 'IA' (abbreviation).
'est'+'on'+'ia'='ESTONIA'
(Other definitions for estonia that I've seen before include "So eat in about here in Northern Europe" , "On a site (anag)" , "Republic in northeastern Europe" , "So eat in here in Eastern Europe" , "Country due S. of Finland" .)