In a Dutch oven over medium heat, saute onions in oil. Add garlic; cook 1 minute longer. Add the water, tomato sauce and paste, parsley, basil, salt and pepper; bring to a boil. Reduce heat; cover and simmer for 50 minutes.
In a large bowl, combine the first seven meatball ingredients. Crumble beef over mixture and mix well. Shape into 1-1/2-in. balls.
In a large skillet over medium heat, brown meatballs in batches in oil until no longer pink; drain. Add to sauce; bring to a boil. Reduce heat; cover and simmer for 1 hour or until flavors are blended, stirring occasionally. Serve with spaghetti. Yield: 12-16 servings.