In a small mixing bowl stir together basil, olive oil or cooking oil, and parsley; set aside.
In a 1-1/2-quart casserole layer 1 cup of the potatoes, half the sweet pepper, 2 tablespoons of cheese, and half of the basil mixture. Sprinkle lightly with salt and pepper. Repeat layers. Top with remaining 1 cup of potatoes and sprinkle lightly with salt and pepper.
Bake, covered, in a 350 degree F oven about 40 minutes or until potatoes are tender. Sprinkle with the remaining 1/4 cup cheese and the olives. Bake, uncovered, for 2 to 3 minutes more or until cheese melts. Makes 4 servings.