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Cook spaghetti according to package directions; drain.
In a large bowl, combine bread crumbs, pesto, cheese and garlic powder. Add chicken; mix lightly but thoroughly. Shape into 1-in. balls.
In a large skillet, brown meatballs over medium heat, turning occasionally.
Add sauce and water; bring to a boil. Reduce heat; simmer, covered, until meatballs are cooked through, about 5 minutes.
Serve with spaghetti. If desired, top with basil and additional cheese.