European has fanciful dream to acquire large gemstone (7)
I believe the answer is:
'gemstone' is the definition.
(I know that emerald is a type of gemstone)
'european has fanciful dream to acquire large' is the wordplay.
'european' becomes 'E' (abbreviation e.g. EU).
'has' says to put letters next to each other.
'fanciful' indicates an anagram (a fanciful or silly ordering of the letters).
'to acquire' is an insertion indicator.
'large' becomes 'L' (eg in clothes sizes).
'dream' is an anagram of 'merad'.
'merad' enclosing 'l' is 'merald'.
(Other definitions for emerald that I've seen before include "Precious green stone" , "and 13 Across: Poetic name for Ireland" , "city in Oz?" , "La couleur" , "Precious gemstone" .)