Manchester City boss Pep Guardiola believes Arsenal are creating "something special" under Mikel Arteta and the north London side can challenge for major honours if his former assistant is backed in the transfer window.
Arteta left his role as City's assistant coach to replace fellow Spaniard Unai Emery as Arsenal manager shortly before Christmas, and has since overseen an improvement in playing style as they chase Europa League qualification.
Following Arsenal's midweek victory over champions Liverpool, Arteta suggested he will need financial backing in the transfer window to get Arsenal closer to the top teams next season.
"I see from the side how they celebrate goals, how they fight for every ball. They have begun to create something special for the club," Guardiola told a news conference on Friday.
"Arsenal were one of the elite clubs in English football for the last 20, 30 years. I am pretty sure (Arteta is) the right person to take them back to the position they were. When the club supports him there is no better person to do the job than Mikel."
"I have the feeling he is creating something unique. If he can be supported by the club with investment, get the players they need, they can be contenders for the next years."
City, who lifted the League Cup earlier this season, can finish the campaign with three trophies, and next on their agenda is the FA Cup semi-final against Arsenal on Saturday.
Guardiola said Chilean goalkeeper Claudio Bravo, who usually deputises for first-choice Ederson in domestic cup competitions, will miss the weekend's clash due to an injury.
"We are playing Ederson," Guardiola added. "Claudio is a little bit injured. In the last few days he was not on the bench. He has muscular problems and can't play tomorrow."