European sea, or part of America confused with Spain (7)
I believe the answer is:
caspian
'european sea' is the definition.
The definition suggests a singular noun which matches the answer.
'part of america confused with spain' is the wordplay.
'part of' becomes 'c' (I can't justify this - if you can you should believe this answer much more).
'america' becomes 'a' (common abbreviation - e.g. in organisation names).
'confused with' is an anagram indicator.
'a' with its letters anagrammed with 'spain' can make 'aspian'.
'c'+'aspian'='CASPIAN'
'or' is the link.
Can you help me to learn more?
(Other definitions for caspian that I've seen before include "Prince --, Narnia book" , "-- Sea, inland lake" , "World's largest inland sea" .)