A polarising figure amongst supporters, Xhaka was named as the club's new captain after Laurent Koscielny's departure last summer, a decision which was the result of Unai Emery's infamous playing squad vote.
It all came to a head for Xhaka when he was substituted during the 1-1 draw with Crystal Palace in October. Walking off the ground to the sound of jeers, the midfielder removed his shirt while swearing and gesturing towards the Emirates crowd.
This lead to Emery stripping him of the captaincy and rumours circled that he would be sold in January.
However, the 27-year-old has won back his place under new manager Mikel Arteta, remarkably starting every Premier League match in 2020, with the Gunners undefeated in that time.
Schwegler knows Xhaka better than most, having lost his place to the former Borussia Monchengladbach midfielder during qualifying for Euro2012.
And the Swiss insists he harbours no prejudice for Xhaka after witnessing the trajectory of his career.
"It was tough for him, but now he's back in the team. That has showed me that he has a good mentality and is a real fighter," the Western Sydney Wanderers midfielder told Tribalfootball.com.
"He was even like that eight years ago, when he came to the national team on the first day. You could see he was a fighter and wanted to win every game, every friendly game, every training game, that's his mentality.
"Maybe it was hard for me because he took my place.
"But now I can see why! It's not because I was so bad, it was because he was so good. I definitely can accept this."
Schwegler was part of the Switzerland squad that failed to make it past the group stage at the 2010 World Cup.
The European nation have since reached the last-16 at their last three major tournament appearances.
And Schwegler thinks that Vladimir Petkovic's side can surprise at the next European Championships, which will now be played in 2021 due to the coronavirus pandemic.
"It was one of the best experiences, especially the World Cup. It's one I'll never forget," Schwegler added.
"We had a great team, (Xherdan) Shaqiri came in the team and some young players. Now they are a much, much better team and I think we can have great tournament at the European championships."