The following details are from a Sega press release:

In the world of Valkyria Chronicles, the year is 1935 E.C., and the continent of Europa has been plunged into the Second Europan War between the Autocratic East Europan Imperial Alliance — also known as The Empire — and the Atlantic Federation over the precious resource Ragnite. The Empire is sweeping through the continent like an unchecked wildfire and has its eyes set on the rich Ragnite deposits of the Principality of Gallia. Although peaceful Gallia remains neutral in the conflict, its citizens will need to defend home and country against the inevitable invasion. Players follow Lieutenant Welkin Gunther and the vaunted Squad 7 of the Gallian Militia as they take on the seemingly insurmountable forces of the Empire.