Giving leave to European in a letter (7)
I believe the answer is:
letting
'giving' is the definition.
(letting is a kind of giving)
'to european in a letter' is the wordplay.
'to european' becomes 'lett' (old-fashioned term for someone from Latvia).
'a letter' becomes 'g'.
'lett'+'in'+'g'='LETTING'
'leave' acts as a link.
(Other definitions for letting that I've seen before include "activity in the property market" , "Giving permission to" , "Dealing with property" , "Renting out; allowing" , "Granting to a tenant" .)