Make the sauce: In a large deep skillet, heat olive oil over medium heat. Add onions, and cook until they begin to soften, about 3 minutes. Add lamb, salt, cinnamon, pepper, and nutmeg. Cook, breaking lamb into pieces, until it is no longer pink. Add wine, and cook until liquid is almost evaporated. Stir in tomato paste, bay leaves, and 2 cups water. Cover, and let simmer 30 minutes, skimming the fat occasionally. Remove from heat, and set aside, covered.