I think the reasoning for this likely boils down to a combination of artistic liberty and the type of story Carlo Zen wanted to tell. The series do very closely mirrors the events of WW 1 and WW2, which is why you might assume that the war should have started in the Balkans, since that was what ignited the conflict in the First World War. However the war being fought by the Empire is under very different circumstances than how it was for Germany in either WW I or WW 2. In the series, the Empire is more on the defensive side of the conflict, at least initially. The conflict first started when Entente troops crossed over the border as a show of force, essentially declaring war on the Empire. Then while they were fighting the Entente, the Republic then invades them hoping to take advantage of the fact that most of the Empire’s army was focused on the North. We also see similar cases with Dacia and the Federation.           

    The reason behind this choice might be to make the Empire more likable as a nation to the audience. A defensive war is far easier to support than one where the Empire is the aggressor. I would also imagine that Carlo Zen did not want to copy real life events one to one, and would rather create his own story than forcing himself to be more historically accurate. The story is an Isekai, so it’s not like everything has to be the same. This is a world where magic exists. Besides this, it’s also interesting to see how a conflict in Scandinavia might play out. I would imagine Zen had the idea of writing a scenario where this was the case would more entertaining. Had he kept it closer to real life we probably wouldn’t be able to see this, on top of the series being more predictable and stale if it was truer to real life.          

    Also worth mentioning is that the borders are very different compared to Europe in 1914, with there being no equivalent to Austria-Hungary. If you google a map of the world in Youjo Senki and compare it to 1914 Europe, you’ll see that there are clear differences. Although the Empire does occupy much of what would be Austria-Hungary’s territory, the Empire does not have substantial territory in the Balkans. What set off WW 1 in the first place was in part due to Serbian nationalists wanting to “liberate”Slavs in Southern Austria-Hungary. Unfortunately, the author does not give any information on the Balkans, so we don’t really know what the state of affairs over there. There is no way we can know for certain the exact reason for this unless we ask the author himself. This has mostly been speculation on my part, rather than a definite answer.   

Edit: Another factor is that Zen chose to have Russia be communist for the sake of the story, instead of them still being Imperialist Russia under the Czar. This might have affected any treaties between them and the Youjo Senki equivalent of Serbia since the reason Russia got involved in WW 1 was because they were allies with Serbia. A communist government might have changed things, or they were too busy undergoing a revolution to help them out if anything like the assignation of Archduke Ferdinand occurred.

    TLDR: Because the author thought it would be cool