The most common and most likely answer to this crossword clue is the 11 letter word KRAUT/COOMY
K
R
A
U
T
/
C
O
O
M
Y
Buddy explains!
The straight part
We know that "Offensive term for foreigner/smutty" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case offensive term for foreigner/smutty = kraut/coomy.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.