While the winding wire does appear to be a type used for high voltage water filled motors, the entire design does not seem too efficient for that purpose. First, that winding is a pain in the butt and very hard to keep the winding tight in the slot to keep it from rubbing in the slot. You are correct that VPI is not performed, as it would provide no benefit. However, you should still have phase seperators as the voltage difference between phases can really do a number on the insualtion on the end turns without it.
The copper cross section is about the same, as the wire insulation required to keep the water out also traps heat effectivley, as well as has a lower allowable operating temperature.
Another thing, not winding related, is why the heck would you have holes in the stator that allow the water to leak in and out. From what I can see of that design, there seems to be much better ways to do it, but I can not see the whole system it is used in and may be missing something that makes it practicle.