The Spanish full-back made 98 appearances for the Reds during his two-and-a-half year spell at Anfield, before rejoining former club Real Madrid for £3.5 million in 2009.
The 56-capped Spanish international has become a key part of the first-team set-up at the Bernabeu, and he is set to once again line up against the Reds on Tuesday night - with Liverpool looking to fight for a way into the Champions League knock-out stages.
Despite playing a part in the reverse fixture at Anfield - which Madrid won with a dominating performance - Arbeloa believes that Liverpool will pose a threat to the reigning European Champions, with the Merseyside club needing three points if they want any real chance of progressing to the next stage of the competition.
In an interview with the official Liverpool website, the 31-year-old said: “Liverpool need the points and will come to the Bernabeu to try and win the game. It's a big chance for them to play in this stadium and we know it'll be really difficult.”
The Spaniard suggested that, despite the Reds not playing at their best, they have key players all over the pitch - with misfiring striker Mario Balotelli a surprising dangerman.
He added: “Maybe they are not playing at their best, but it will be difficult because they have really good players such as [Raheem] Sterling, [Mario] Balotelli and Stevie [Gerrard]. They are a tough team.
“We know in the other game they could have scored because they have these good players. If we want to beat them, we'll have to do our best and keep playing as we have been.”
Considering Balotelli’s form in a Liverpool shirt, it is a surprise to see Arbeloa name the Italian forward as one of the players Madrid should fear. Despite scoring twice since his £16 million move from Milan, the 24-year-old has looked out of sorts and has yet to find the back of the net in the Premier League. Whilst his performances have been over-criticised due to the Reds poor form, he has been well-below the standards expected of him - and it is hard to see why Arbeloa has listed him as one of the players Madrid must watch out for.
Balotelli is sure to start on Tuesday night, with Rickie Lambert continually left on the substitutes bench despite the Italian’s performances, and, if Liverpool intend to leave Madrid with the three points, they will need the forward to finally perform at the best of his abilities.