Kisaka flies an airplane that escorts the Archangel back to the repair facilities at Onogoro Island. As soon as the ship docks, Cagalli runs across the deck and boards the ship to find Kira. When she sees him, she jumps on him to give him a hug and ends up knocking him to the floor. She says she thought he was dead, but he assures her he’s alive. On the bridge, Murrue thanks Uzumi for his help. He says that with the destruction of the the Alaska Base, the world is plunged into chaos. He tells everyone to rest so they can discuss things later. In the mess hall, Kuzzey asks Sai if they can leave since they are no longer soldiers, but Sai says that a charge of desertion sticks for life. Miriallia puts away her tray and finds one sitting there that is supposed to be for Dearka. In the mobile suit hangar, Cagalli tells Kira about how she found Athrun after the Aegis Gundam self-destructed. She tells him that Athrun said he killed Kira and was crying. She asks Kira why he would fight his own friend, and he answers that it’s because everyone else would have died. Also, he thought there’d never be a situation where either of them would kill each other. Miriallia brings Dearka his food, and he asks why he’s still locked up. She tells him that they’re at Orb and no one can leave the ship. Later, Murrue, Mu and Kira meet with Uzumi and Cagalli. He says that the destruction of Alaska destroyed 80% of the attacking ZAFT force. He also tells them that the situation is getting worse and shows them TV reports of Naturals uniting across the world in their anti-Coordinator hatred. Uzumi also says that the Atlantic Federation is pressuring neutral nations such as Orb to join the fight against ZAFT. Uzumi says that Orb accepts people whether they’re Naturals or Coordinators, but the Atlantic Federation views all Coordinators as evil. Uzumi tells Murrue and the others that they are young and have the power to make their future come true. Kira asks Uzumi what he thinks, and Uzumi says it is time for their swords to stop acting as decoration.
Along the coast of Panama, Vosgulov subs deploy GOOhNs, ZnOs and DINNs to prepare for an assault on the Alliance base. Yzak launches in the Duel Gundam and takes off with a Guul. A sub captain thinks their force is too small, but Rau says if they don’t attack that Patrick’s political situation will become unstable. Also, they need to destroy Panama’s mass driver to keep the Alliance stranded on Earth. Rau returns to his office, and Flay pulls a gun on him. Rau apologizes for dragging her around, and she asks why he took her. He tells her that as far as everyone is concerned, she is already dead, and if she shoots him she will be killed. He tells her that if she can’t accept it she should just kill herself. The ZAFT forces begin their attack, with DINNs coming in from the air and GOOhNs and ZnOs from the water. Rau tells Flay that people are fighting and dying, but that doesn’t matter to her. He says that just because she wears a uniform, it doesn’t make her a soldier. On the Archangel, Kisaka tells Murrue and Mu that ZAFT is attacking Panama. As the battle continues with the Alliance losing ground, the commanding officers decide to deploy the Strike Dagger, a mass production mobile suit based on the Strike Gundam. In space, several Laurasia class ships launch objects called “Gungnir,” which begin atmospheric descent towards Panama. The Strike Daggers make their first appearance, and GINN pilots confuse them for the Strike Gundam. Yzak destroys several of them and says they’re not the Strike Gundam. The Gungnirs land at Panama, and GINN pilots activate them. Rau thinks it’s perfect that the Strike Daggers are deployed, because they too will be affected by the EMP (electromagnetic pulse). The Gungnir explode and send out an EMP wave that disables the Strike Daggers and destroys the mass driver. As soldiers surrender, ZAFT pilots slaughter them as revenge for Alaska. Yzak watches and doesn’t see the point in getting revenge on defenseless pilots. On the Archangel, Cagalli tells Kira that Erica has something for him at Morgenroete. He goes to Morgenroete with her and is joined by Murrue and Mu. Erica presents them with the fully repaired Strike Gundam, which she loaded with Kira’s new OS. Cagalli wants to pilot it, but Mu says he will, and he spars with Kira’s Freedom Gundam.
Following the devastating failure at Alaska, it looks like ZAFT is ready to strike back at the Alliance with their attack on Panama. Though it is a small force attacking, it gets the job done. We get to see the new mobile suit Strike Dagger in action, which basically is to the Strike Gundam what the GM was to the original Gundam. They are more powerful than GINNs and perform well enough until the Gungnir is deployed. After that, the situation changes from a battle to a massacre. ZAFT pilots filled with anger ruthlessly kill hordes of surrendering soldiers who don’t even have mobile suits or small arms to defend themselves. Also, Mu finally gets his chance to be a mobile suit pilot with the Strike Gundam, which has now become the common hand-me-down Gundam as seen in various other series. Soon we’ll see how well he does with it.