Place basil, tarragon, and bay leaf on a 6-inch square of cheesecloth; tie corners of cloth together with string.
Brown beef in hot oil in a Dutch oven over medium heat. Add herb bag, onion, and next 8 ingredients; bring to a boil. Cover, reduce heat, and simmer, stirring often, 1 hour. Stir in mushrooms and olives; simmer 30 minutes. Remove and discard herb bag.
Combine broth and flour in a jar; cover tightly, and shake vigorously. Stir into stew. Cook, stirring constantly, until thickened. Serve over rice.
