Speculation linking the 24-year-old with a move away from the Emirates has been rife throughout the summer, and following the departure of Cesc Fabregas the Gunners may be resigned to losing the midfielder.
“I think mentally he’s left the club. It looks as if he is going to go,” Smith told talkSPORT. “He’s got a year on his contract and Manchester City are willing to pay £20-odd million. I think you’ve got to sell him.”
The former striker added that Wenger needs to bring in a number of players before the transfer window closes on August 31.
“You’ve got to hope as an Arsenal fan that Arsene Wenger brings in a couple of players,” he added. "I’m not confident [he will].
“He’s been linked with the likes of Jagielka, Cahill, Samba, but if he wants one of them why hasn’t he gone out and got them in time for pre-season? He could have, they are available for the right price.
"If he doesn’t get anybody in, they are going to be up against it finishing in the top four.”
Meanwhile, the Premier League side beat Udinese 1-0 at the Emirates in the club’s first leg play-off tie in the Champions League.