The 73-year-old world renowned writer spoke out about the ongoing protests in Northern Ireland, and he described the current unrest as "very dangerous indeed".
Demonstrations against the decision to restrict the flying of the Union flag on civic buildings to 18 days a year began last month.
Violence, which broke out at a number of the protests, has made news across the world and it is feared the disorder could have an impact on investment and tourism in Northern Ireland.
Speaking to The Times, Heaney said loyalists "perceive themselves as almost deserted. And right enough. I think Sinn Féin could have taken it easy. No hurry on flags.
"What does it matter? But - it matters utterly to them. And now there's no way they're going to go back on it, of course," Heaney added.
There’s never going to be a united Ireland, you know. So why don’t you let them fly the flag?
Sinn Féin voted alongside the Alliance Party and the SDLP to limit the number of days and on Monday it was revealed deputy First Minister Martin McGuinness had met with flag protestors.
During OFMDFM questions he said: "I met with some people who were involved in the protests and I also met with some people who I believed could influence the ending of violence on the streets."
The Co Londonderry-born poet described himself as a person who "knows something of prejudice, from early on, I can understand the loyalists".
Heaney said: "I remember at the very beginning of the Troubles in Derry, Eddie McAteer, a big nationalist politician, he was like the paterfamilias of nationalism. And he said, 'Both sides are entitled to their pageantry!'.
"Which was a rather grand utterance, but true enough. But there's no doubt that the loyalist side take the pageantry to extreme, they wipe the floor with the others."
The Irish poet, who now lives in Dublin, once objected to his poems being part of Penguin's Contemporary British Poetry anthology, later writing "'Be advised, my passport's green/ No glass of ours was ever raised/ To toast the Queen".
Flag protestors said they feared limiting the flying of the flag was an erosion of the rights of unionists and loyalists. During the interview, Heaney said the flag was part of the loyalist "entitlement factor".
"Loyalism, or Unionism, or Protestantism, or whatever you want to call it, in Northern Ireland it operates not as a class system but a caste system," said the 73-year-old Nobel laureate.
"And they [the Loyalists] have an entitlement factor running; the flag is part of it."
For eight weeks protestors have demonstrated across Northern Ireland, with some of the worst scenes of disorder focused on east Belfast and Newtownabbey, where police have come under attack from petrol bombs, fireworks and other missiles.
More than 100 officers have been injured and businesses, particularly in Belfast, say the continued disorder has cost them thousands of pounds in lost income.