Aunt Nina's Breadballs and Sauce

Ingredients

• 1 cup water
• 1 large egg
• 3 garlic cloves, minced
• 1 tablespoon chopped fresh parsley
• 1 tablespoon chopped fresh basil
• 1/4 teaspoon pepper
• 1 (16-ounce) loaf Italian bread, torn into small pieces
• 1 1/2 cups grated Parmesan cheese
• 6 tablespoons olive oil
• 1 onion, minced
• Salt
• pepper
• 2 (6-ounce) cans tomato paste
• 1 tablespoon sugar
• 2 teaspoons dried oregano
• 1/8 teaspoon red pepper flakes
• 2 cups water
• 1 (28-ounce) can diced tomatoes
• 1 (15-ounce) can tomato sauce
• 1/2 cup grated Parmesan cheese