For standard Java EE projects, libraries should be located in the {web-app} / WEB-INF / lib folder . GAE requires them to be there to load code into the engine.
Alternatively, you can use Maven to determine your dependencies and deployments for GAE
UPDATE: The GAE project follows the standard Java EE project structure for creating and deploying a war file. The convention is that your lib folder is located in {web-app} / WEB-INF / lib. A Google plugin automatically generates such a structure (an example from the plugin documentation):
MyTestProject src/ log4j.properties META-INF/ jdoconfig.xml com/ mytestproject/ MyTestProjectServlet.java war/ index.html WEB-INF/ appengine-web.xml web.xml logging.properties classes/ lib/ ...App Engine JARs...
The plugin allows you to change the location for your "military" directory, but not the location of your libraries, since it must comply with the Java EE standard.
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