Italy cutting canal to a distressed European region (9)
I believe the answer is:
catalonia
'european region' is the definition.
(region of Spain)
'italy cutting canal to a distressed' is the wordplay.
'italy' becomes 'i'.
'cutting' is an insertion indicator (some letters cut their way into a word).
'distressed' indicates anagramming the letters.
'canal'+'to'+'a'='canaltoa'
'canaltoa' anagrammed gives 'catalona'.
'i' put within 'catalona' is 'CATALONIA'.
(Other definitions for catalonia that I've seen before include "autonomous region" , "part of Spain" , "secessionist area" , "NE region of Spain" .)