Such payments are immune from garnishment, spokesman James Foley said.
The case involves relatives of the four Cuban-Americans whose two unarmed aircraft were shot down by MiG jets north of the island in February 1996.
In 1997, a federal judge in Miami, James Lawrence King, awarded a $187 million judgment to the relatives. Since then, they have tried unsuccessfully to collect the money from the Cuban government.
They were spurned in an effort to recover the funds from Cuban assets frozen in the United States. They then sought to tap into the money being paid to Cuba's ETECSA phone company by U.S. telephone companies as Havana's share of the payments for long-distance calls from the United States to Cuba. That amounted to an estimated $60 million to $70 million in 1997.
Foley said the telecommunications payments are immune from garnishment because Cuban telephone company is an entity separate from and is not legally responsible for the debts of the two defendants in the case, the Republic of Cuba and the Cuban Air Force.
Second, the licensed payments to the Cuban phone company are immune from garnishment under Treasury Department regulations, he added.
Aaron Podhurst, lead attorney for the families, said at a federal court hearing Tuesday in Miami that the government is doing everything in its power to prevent the families from collecting the judgment.
``They are now in a conspiracy to do this, a conspiracy with the government of Cuba,'' he said.
King said he would rule on the families' complaint after 10 days to give attorneys on both sides a chance to file additional briefs.
The Cuban government threatened to cut off all phone links with the United States if the law suit was successful.
Foley said direct communications is a critical element of U.S. policy of support for the Cuban people.
``Promotion of a civil society and contacts between the U.S. and Cuban peoples are policies which have been received support abroad and in the United States, and bipartisan support from the U.S. Congress,'' he said.
On another subject, Foley criticized a legislation unveiled by Cuba's legislature on Monday that seeks to broaden the range of activities punishable as security crimes. The measures, part of a comprehensive anti-crime package, appeared to be aimed at Clinton administration proposals to expand ties between American nongovernmental organizations and Cuban counterpart groups.
Foley said the administration is not surprised by the measures, however regrettable they are, but added they are in keeping with the repressive nature of the regime.
``We've repeatedly and forcefully condemned the Cuban regime's efforts to suppress fundamental freedoms and human rights,'' he said. ``The legislation under consideration is clearly intended to stifle independent thought.''
© Copyright 1999 The Associated Press