Lenient ethics transformed a small country (13)
I believe the answer is:
liechtenstein
'a small country' is the definition.
(I know that Liechtenstein is European country)
'lenient ethics transformed' is the wordplay.
'transformed' is an anagram indicator.
'lenient'+'ethics'='lenientethics'
'lenientethics' is an anagram of 'LIECHTENSTEIN'.
(Other definitions for liechtenstein that I've seen before include "Land" , "Landlocked Alpine principality, capital Vaduz" , "European principality, capital Vaduz" , "Principality of central Europe" , "bit of Europe" .)