Mr Billy Hutchinson told the Belfast Telegraph on Thursday that if the Belfast Agreement failed, London and Dublin could take their own initiative.
Mr Hutchinson, a Progressive Unionist Party Assembly member, said unionists risked getting "Anglo-Irish Agreement Mark 2" imposed upon them. He said this would inevitably lead to a "more sophisticated" loyalist backlash against the Republic.
"Loyalists wouldn't accept an Anglo-Irish Agreement Mark 2 and, irrespective of whether there is republican violence or not, loyalists will be dragged back into it."
In this situation, Mr Hutchinson said, he believed loyalists would try to cripple the Republic.
"It is very easy to attack bloodstock and it is very easy to attack tourists," he said. "There would be a bigger threat from loyalism than there had been in the past."
Asked if that meant a situation similar to that in Egypt, where tourists have been attacked, he said: "Obviously, that is the way it could turn out. What I am hoping for is we actually get the thing to work right and that doesn't become the scenario."
