Southern peninsula in part of modern Russia (7)
I believe the answer is:
siberia
'part of modern russia' is the definition.
(large region of Russia)
'southern peninsula' is the wordplay.
'southern' becomes 's' (abbreviation).
'peninsula' becomes 'Iberia' (peninsula including Spain and Portugal).
's'+'iberia'='SIBERIA'
'in' is the link.
(Other definitions for siberia that I've seen before include "Vast Asian region of Russia" , "'Region of Russia, famous for its long, cold winters (7)'" , "Frozen region of former USSR noted for prison camps" , "Eastern part of Russia" , "region abroad" .)