Nel quello is wrong for two reasons: 1: nel = in il which can't be combined with "quello" because you would say "in the that". Secondly: quello is before -z-/sn/sp/st (esse impura). Paese begins with -p- so it is quel.
I was penalized for translating "quella nazione" instead than "quel paese". I know for a fact that, when speaking about a country (Italy, France, Germany, etc.) it is also correct to use the feminine noun "nazione" (nation)