Preheat oven to 450°F. Sauté the bacon in the oil in a 9- to 10-inch fireproof Dutch oven, 3 inches deep, over moderate heat for 2 to 3 minutes to brown lightly. Remove to a side dish with a slotted spoon. Reheat bacon drippings until fat is almost smoking before you sauté the beef.
Dry the beef in paper towels; it will not brown if it is damp. Sauté it, a few pieces at a time, in the hot oil and bacon fat until nicely browned on all sides. Add it to the bacon. In the same fat, brown the sliced vegetables. Pour out the sautéing fat.
Return the beef and bacon to the Dutch oven and toss with the salt and pepper. Then sprinkle on the flour and toss again to coat the beef lightly with the flour. Set Dutch oven uncovered in middle position of preheated oven for 4 minutes to brown the flour and cover meat with a light crust. Toss the meat and return to oven for 4 minutes more. Remove Dutch oven and turn oven down to 325°F.
Stir in the wine and enough stock so that the meat is barely covered. Add the tomato paste, garlic and herbs. Bring to a simmer on top of the stove. Then cover the Dutch oven and set in lower third of preheated oven. Regulate heat so liquid simmers very slowly for 2 1/2 to 3 hours. The meat is done when a fork pierces it easily.
While the beef is cooking, prepare the pearl onions and mushrooms. To peel onions, set them in boiling water for three minutes, then drain, trim off ends and peel. To brown-braise onions, sauté in equal parts butter and oil for 10 minutes, turning to brown all sides. Add 1/2 cup stock, cover and simmer gently until the liquid evaporates, about 30 minutes. Set onions and sautéed mushrooms aside until needed.
When the meat is tender, pour the contents of the Dutch oven into a sieve set over a saucepan. Wash the Dutch oven and return the beef and bacon to pot. Distribute the cooked onions and mushrooms over the meat.
In the saucepan, skim fat off the sauce with a fork. Simmer sauce for a minute or two, skimming off additional fat as it rises. You should have about 2 1/2 cups of sauce thick enough to coat a spoon lightly. If too thin, boil it down rapidly. If too thick, mix in a few tablespoons of stock. Taste carefully for seasoning. Pour the sauce over the meat and vegetables. Cover the Dutch oven and simmer for 2 to 3 minutes, basting the meat and vegetables with the sauce several times. Decorate stew with parsley and serve with potatoes, noodles or bread.
Makes 6 servings.
Wine pairing: Pinot Noir