Sailor embraced by sailor around foreign capital (5)
I believe the answer is:
rabat
'foreign capital' is the definition.
'sailor embraced by sailor around' is the wordplay.
'sailor' becomes 'ab' (abbreviation for able seaman).
'embraced by' is an insertion indicator.
'sailor' becomes 'tar' (tar is a kind of sailor).
'around' says the letters should be written in reverse.
'ab' going within 'tar' is 'tabar'.
'tabar' back-to-front is 'RABAT'.
(Other definitions for rabat that I've seen before include "Moroccan city" , "Capital of Morocco" , "capital city" , "Moroccan capital" , "N African city" .)