Dependent on your painting skills,
a) Cut out a rectangle of paper towel, 'spot weld' it into
place with dobs of glue. When that is dry, paint with watered
down PVA. When that dries, paint your flag.
b) Size a copy of the flag you want to the dimensions you want.
Crumple the paper flag a few times (stops the 'flag' looking like
it has been heavily starched
). 'Spot weld' it in place with some
dobs of glue. When that has dried paint with diluted PVA. When
that has dried, repair/highlight any bits of the flag you want.
This can be done with gel pens.
With either method, if you want straps (as per your example) wrap a
little bit of cotton around it, (before the diluted PVA section) a spot,
or two, of superglue will hold it in place.
Hope this helps.