In a large saucepan, heat the olive oil. Add the garlic and cook over moderate heat, stirring, until golden, about 2 minutes. Add the diced tomatoes and their liquid, the water, bay leaves, crushed red pepper and sugar. Season with salt and bring to a boil. Reduce the heat to low and simmer, stirring occasionally, until slightly thickened, about 45 minutes. Discard the bay leaves.