Lives, I see, with lover around Persian city (7)

I believe the answer is:

isfahan

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'persian city' is the definition.
(I know that Isfahan is Iranian)

'lives i see with lover around' is the wordplay.
'lives' becomes 'is' ('be' can be a synonym of 'live').
'i' becomes 'a'.
'see with' becomes 'h' (I am not sure about this - if you are sure you should give a lot more credence to this answer).
'lover' becomes 'fan' (synonyms).
'around' means one lot of letters goes inside another.
'a'+'h'='ah'
'ah' put into 'fan' is 'fahan'.
'is'+'fahan'='ISFAHAN'

Can you help me to learn more?

(Another definition for isfahan that I've seen is " Iranian city".)

I've seen this clue in The Times.

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