Ingredients

1. 1/4 cup plus 2 tablespoons olive oil
2. 6 pounds lamb shoulder, trimmed and cut into 1 1/2 -inch cubes
3. Salt and freshly ground pepper
4. 3 medium yellow onions, coarsely chopped
5. 4 large garlic cloves, minced
6. 3 tablespoons all-purpose flour
7. 3 tablespoons tomato paste
8. Bouquet garni made with 1 fresh thyme sprig, 1 fresh rosemary sprig, 1 bay leaf and 3 fresh parsley sprigs tied in cheesecloth
9. 3 pounds red potatoes, halved or quartered if large
10. 1 tablespoon unsalted butter
11. 1 pound pearl onions, peeled (see Note)
12. 1 tablespoon finely chopped fresh flat-leaf parsley

Directions

1. Heat 1 tablespoon of the olive oil in a large enameled cast-iron casserole. Season the lamb cubes with salt and pepper and add one-quarter to the casserole. Sear the lamb over moderately high heat until browned all over, about 7 minutes. Transfer to a platter. Brown the remaining meat in 3 more tablespoons of the olive oil and transfer to the platter. Add the onions and garlic to the casserole and cook, stirring occasionally, until just softened, about 4 minutes. Add 1 more tablespoon of the olive oil and the flour to the casserole, stirring to coat the onions. Stir in the tomato paste.
2. Return the lamb to the casserole. Add 5 cups of water and the bouquet garni, season with salt and pepper and bring to a boil over moderately high heat. Reduce the heat, cover and cook, stirring occasionally, until the meat is tender but not falling apart, about 1 1/2 hours. 
3. Bring a saucepan of salted water to a boil. Add the potatoes and boil over moderately high heat for 5 minutes. Drain and add to the stew. Continue cooking until the potatoes are tender and the lamb is very tender, about 15 more minutes. Discard the bouquet garni. 
4. Meanwhile, in a medium skillet, melt the butter in the remaining 1 tablespoon olive oil. Add the pearl onions and cook over moderate heat, stirring often, until lightly browned, about 8 minutes. Season with salt and pepper. Add 1/4 cup of the lamb stew liquid and 1/2 cup of water and cook, stirring occasionally, until tender and well glazed, about 15 minutes. If necessary, add a little more water to the skillet during cooking. 
5. Stir the pearl onions into the navarin and season with salt and pepper. Garnish with the chopped parsley and serve. 
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Notes

To peel pearl onions, trim the root ends, then soak the onions in very hot water for 2 to 3 minutes. Drain and rinse with cold water. The skins will slip right off.