Crazy pal fires gun in part of Arabian Sea (7,4)
I believe the answer is:
persian gulf
'part of arabian sea' is the definition.
('Persian Gulf' is part of 'arabian sea')
'crazy pal fires gun' is the wordplay.
'crazy' indicates an anagram.
'pal'+'fires'+'gun'='palfiresgun'
'palfiresgun' is an anagram of 'PERSIAN GULF'.
'in' acts as a link.
(Other definitions for persian gulf that I've seen before include "Arm of Arabian Sea between Iran and Saudi Arabia" , "Water between Iran and Saudi Arabia" .)