Prepare the meat. Trim off most of the excess fat, and cut the meat into about 2.5cm (1 inch) cubes. Chop the onions, mince the garlic cloves, the dice the tomato and the pepper.
Prepare the sauerkraut. If you have fresh sauerkraut from the market or from your favourite butcher, and you find it too salty, simply wash it out under cold tap water. Put a handful of cabbage under the water for a few seconds, and then squeeze the excess water out with your hands. You can do it in small batches.
Heat the oil over medium heat in a large pot, add the onions, and saute until they are golden and tender. Add the garlic and cook for another minute or so. Be careful, don't let the garlic burn. Remove the pot from the heat, and add the Hungarian sweet paprika. Stir and place the pot back to the heat.
Add the meat, and sear the cubes for a couple of minutes while stirring frequently
Add some salt, pepper, the bayleaves, the tomatoes, peppers, and 100 ml (⅓ cup) water. Be careful with the salt. You don't want to use too much at the beginning, as the sauerkraut will add salt to the dish as well.
Bring the mixture to a boil, and reduce the heat. Cover and let it simmer for 30 minutes. Check and stir it occasionally. Add a bit of water if necessary.
Once the meat is tender, add the sauerkraut, and stir it together with the stew. Add 500 ml (2 cups) water, and let it cook for another 30 minutes. If you prefer more tender sauerkraut, simmer a bit longer.
Serve it with sour cream and fresh bread.