Place the squid and onions into a large saucepan with the cinnamon stick, cloves and bay leaves. Cover, and simmer over low heat for about 10 minutes. During this time the squid will release its juices.
Uncover the pan, and simmer until the juices have mostly evaporated. Remove the cinnamon stick, cloves, and bay leaves.
Stir in the wine, olive oil, vinegar and pepper. Cover and cook over low heat for about 1 hour, stirring occasionally. If necessary, remove the lid shortly before the end of cooking to allow the sauce to thicken. Ladle into bowls to serve.