Based on the condition of the case it could definitely be water damage. There seems to be no rust on the steel components, which as already stated is a good thing. I have a vintage omega in right now which exhibits rust and the damage can clearly be seen on the steel components.
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It can also be seen on the below picture on the dial side of the movement.
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Most of this damage can be removed from the plates, plus the steel components but it can be very labour intensive.
The fact that your example has no presence of rust on the steel parts is a good sign and makes for an easier restoration.
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