Diaz is set to be a free agent at the end of the season, with reports in Spain claiming that he has already decided to join Madrid at the end of his current deal – and could move to the Spanish capital in the January transfer window if an agreement can be reached between the two clubs.
City already suffered the indignity of losing Jadon Sancho – Diaz’s former teammate at youth level – to Borussia Dortmund in the summer of 2017 when he ran his contract down, and Guardiola says his club are similarly powerless to keep the Spaniard if he has his heart set on leaving Manchester.
“The case of Brahim is very simple: We want him to stay, we want to extend his contract for four or five years and we'll do absolutely everything to keep him here but as I said before it's in his hands,” Guardiola said. “My advice is if he doesn't want to stay, he has to leave.
“We protect him, before we arrive in this period, it was the same with Jadon and Phil [Foden]. But he has to decide and it's no more than that.”
Diaz, who is represented by Guardiola’s brother and agent Pere, turned down interest from Barcelona to join City from Malaga at the age of 14 and quickly established himself along with Foden and Sancho as one of the club’s brightest young talents.
He has made 14 senior appearances for City across all competitions but just three of those have been starts, all in the EFL Cup – the most recent of which saw him score both of his team’s goals in a 2-0 home victory over Fulham earlier this month.
Europe’s top clubs have long been aggressive in attempting to poach the brightest youngsters from rival academies, and last summer City managed to acquire highly-regarded France youth international Claudio Gomes on the expiry of the 18-year-old’s contract with Paris Saint-Germain.
“It's what it is, the market is the market,” Guardiola added. “They cannot say we didn't do absolutely everything to take care of them, him and his family – like a human being, like a person, like a football player. It's incredible how the academy works with these guys, taking care of them, teaching them what they need to be [at] a high standard for a long time but at the end they decide.
“We cannot push more than we pushed with Brahim for example or with the other ones. They arrive as young kids, but the market is the market. City go around England to take players, [but] they work at other clubs and want to stay there.
“At Barcelona, there were many, many players, for example Cesc Fabregas wanted to leave and go to Arsenal. It happens always this situation. All we can do is speak with the families, find out what they want to do with these guys.
“We tell them the truth, how complicated it is in some periods – how many young players are playing at 18 or 19 in the big clubs in Europe and the world and playing every week? Maybe one, [Kylian] Mbappe, but not the other ones. [David] Silva, for example, came away and was young, he went from Valencia to Eibar in the [Spanish] second division.
“We try to speak to them about what is the intention but in the end they sleep on their own and they decide with their families. What can we do? More than we have done? No way. The club did perfectly in all cases but the desire is the desire. Maybe they visualise they are going to play and believe in other places they are going to play. Maybe, maybe not. We will see.”