Smeared theologian hugging European celebrity (7)
I believe the answer is:
defamed
'smeared' is the definition.
('defame' can be a synonym of 'smear')
'theologian hugging european celebrity' is the wordplay.
'theologian' becomes 'dd' (Doctor of Divinity degree).
'hugging' is an insertion indicator.
'european' becomes 'e' (abbreviation e.g. EU).
'celebrity' becomes 'fame' ('fame' can be a synonym of 'celebrity'**).
'e'+'fame'='efame'
'dd' placed around 'efame' is 'DEFAMED'.
(Other definitions for defamed that I've seen before include "libelled" , "Maligned (someone)" .)