European country and its neighbour study peace proposal (9)

I believe the answer is:

eirenicon

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'neighbour study peace proposal' is the definition.
I can't judge whether this definition defines the answer.

'european country and its' is the wordplay.
'european country' becomes 'eire' (Eire is an example).
'and' becomes 'n' (common abbreviation for 'and').
'its' becomes 'icon' (I can't justify this - if you can you should believe this answer much more).
'eire'+'n'+'icon'='EIRENICON'

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I've seen this clue in The Independent.

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