In a small sauce pan, over medium heat, dry toast the chiles and garlic, turning and stirring until aromatic, 2-3 minutes. Add water, vinegar, sugar and salt and stir to dissolve. Simmer for 12-15 minutes until water is reduced by half, stirring occasionally. Strain chiles and garlic from the liquid and allow it to cool to room temperature.
In a food processer, place the remaining ingredients, including the chiles and garlic, with a 1/2 cup cooled chile infused liquid and blend until smooth. Season with additional salt to taste. Place in a covered container and refrigerate for 30 minutes to allow flavors to meld.
As a dip for pita bread or veggies or a spread for a falafel sandwich.