Salaried ambassador embraces retrograde island (7)
I believe the answer is:
madeira
'island' is the definition.
(I've seen this before)
'salaried ambassador embraces retrograde' is the wordplay.
'embraces' indicates the answer is hidden within the clue (I've seen 'embraced' mean this).
'retrograde' is a reversal indicator.
'ariedam' is hidden within 'salaried ambassador'.
'ariedam' written backwards gives 'MADEIRA'.
(Other definitions for madeira that I've seen before include "Portuguese North Atlantic island" , "Portuguese island, capital Funchal" , "Islands in the Stream?" , "Fortified Portuguese wine" , "Island in the Atlantic Ocean" .)