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When no classpath is specified and the claspath environment variable is empty, the user directory should be used.
Created attachment 27567 [details] Proposed fix
Created attachment 27568 [details] Regression test
Fixed and released in HEAD. Regression test added in org.eclipse.jdt.core.tests.compiler.regression.BatchCompilerTest.test035
Verified for 3.2 M3 using build I20051025-0800+JDT/Core v_619