In a small saucepan, over medium heat, dry toast chiles and garlic, turning and stirring until aromatic, 2 to 3 min. Add water, vinegar, sugar and salt and stir to dissolve. Simmer for 12 to 15 min. until water is reduced by half, stirring occasionally. Strain chiles and garlic from liquid and allow it to cool to room temperature. In a food processer, place remaining ingredients, including chiles and garlic, with ½ cup cooled chile-infused liquid and blend until smooth. Season with additional salt to taste. Place in a covered container and refrigerate for 30 min. to allow flavors to meld.
Use as a dip for pita bread or veggies or as a spread for a falafel sandwich.