Watering-place in a European country (5)
I believe the answer is:
'a european country' is the definition.
(country in Europe)
'watering-place in' is the wordplay.
'watering-place' becomes 'spa' (I've seen this before).
(Other definitions for spain that I've seen before include "Iberian country" , "location of Estoril" , "European monarchy" , "ditto" , "Country bordering Andorra" .)