The flag was made from epoxy putty... According to the book, Step 1: Sculpt folds into a block of modeling clay.
Step 2: Mix and flatten blob of epoxy putty. Sandwich between two sheets of waxed paper that's been dusted with talcum powder and roll thin with a dowel. Let the putty stand until it just starts to stiffen, peel from waxed paper and then cut to shape with scissors. Cut tears and holes wth X-acto knife and press into folds on clay mold.
Step 3: When putty has set, remove from mold and paint & decal...