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The options -Z, --compress, and --uncompress all require that there be a
'compress' utility installed on the system.  If there is no compress installed
on your system, you will get errors if you try to use these options to tar.  

Unfortunately, the algorithm used by compress is encumbered, and therefore 
this utility is not part of Debian.

The gunzip package can uncompress a file created with compress, but gzip can
not create a file in 'compress' format.  Since the tar -Z option and friends
end up calling 'compress' or 'compress -d', support for these options is not
available in Debian.  However, at the time of this writing a package called 
'ncompress' exists in non-free, and you can install it if the license terms 
are acceptable to you.  

Alternatively, if you don't really care what the format of the resulting file
is, you could always create a 'compress' that is a symlink to gzip.  I refuse
to do that in either the tar or gzip packages, however, since what gzip creates
is a compressed file, but not a 'compress' format file...