Can activity disrupt European city state? (7,4)

I believe the answer is:

vatican city

I'm a little stuck... Click here to teach me more about this clue!

'european city state?' is the definition.
'Vatican City' can be an answer for 'state?' (Vatican City is an example). I am unsure of the 'european city' bit.

'can activity disrupt' is the wordplay.
'disrupt' indicates anagramming the letters (I've seen 'disrupted' mean this).
'can'+'activity'='canactivity'
'canactivity' with letters rearranged gives 'VATICAN CITY'.

Can you help me to learn more?

(Another definition for vatican city that I've seen is " Papal state".)

I've seen this clue in The Hindu.

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