European wife is inside ship (5)
I believe the answer is:
swiss
'european' is the definition.
(Switzerland is in Europe)
'wife is inside ship' is the wordplay.
'wife' becomes 'w' (abbreviation).
'inside' means one lot of letters goes inside another.
'ship' becomes 'SS' (prefix in ship names eg SS Great Britain).
'w'+'is'='wis'
'wis' going within 'ss' is 'SWISS'.
(Other definitions for swiss that I've seen before include "One from Basle" , "From Zurich, say?" , "From the country of cheese, banks and cuckoo clocks" , "From Geneva, perhaps" , "Sort of roll, of papal Guard" .)