In a large bowl, combine beef, parsley, half the minced garlic, crackers and diced onion. Form into 24 meatballs. Set aside.
In a large, lightly greased, non-stick skillet over medium-high heat, sauté the rest of the minced garlic and the sliced onion for about 1 minute.
Add peppers and sauté for an additional minute. Add tomato paste, tomatoes, sugar and vinegar.
Slowly whisk in flour. Bring mixture to a boil, reduce heat to medium and allow to thicken.
Add meatballs to skillet and allow the exteriors to cook, without cooking all the way through.
Transfer meatballs and sauce to an ovenproof dish and ensure meatballs are covered in sauce. Cover with foil and cook at 425°F (220°C) for 20 minutes, or until meatballs are cooked through.
Remove from oven and allow to rest for 10 minutes; serve over rice.