In a dutch oven heat the oil over medium heat. Add the onions and peppers, cover and cook for 20 minutes, stirring occasionally.
Remove the lid and turn down the heat to medium-low. Stir in the tomato paste salt, and oregano, cook 15 minutes uncovered, stirring occasionally.
Stir in the garlic and red wine vinegar, cook while stirring for 1 more minute.
FOR THE POLENTA:
In a medium saucepan bring the water, milk, salt, and pepper to a boil over medium-high heat.
Reduce heat to low and stir in the cornmeal. Cook while stirring often, about 5 minutes. Take off the heat and stir in the butter and 1/2 cup of the Parmesan cheese (reserving 1/4 cup of the Parmesan for later).
ASSEMBLE THE DISH:
Preheat oven to 350°F.
Spread half the polenta on the bottom of a lightly oiled 8x8 baking dish, the spread on half the pepper mixture, then the remaining polenta, then the remaining pepper mixture. Sprinkle the 1/4 cup of parmesan over the top and bake in the preheated oven for 20 minutes.
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