State restricting political party in French city (5)
I believe the answer is:
nancy
'french city' is the definition.
(city in France)
'state restricting political party' is the wordplay.
'state' becomes 'NY' (abbreviation for New York the US state).
'restricting' is an insertion indicator.
'political party' becomes 'ANC' (African National Congress, South African party).
'ny' going around 'anc' is 'NANCY'.
'in' acts as a link.
(Other definitions for nancy that I've seen before include "City in Lorraine" , "Bill Sikes's girl (Dickens)" , "one of the Mitford sisters" , "Girl's name; NE French city" , "No Man" .)