RESORTS OF OTHER SORTS.

The Canopy Tower is not the only former U.S. government installation that has undergone a metamorphosis since the U.S. turned over the 647-square-mile Canal Zone to Panama.

Just down the road is the Gamboa Rainforest Resort, a luxury hotel that opened in June on grounds that used to house the headquarters of the old Panama Canal's Dredging Division. The $30 million, 110-room hotel, with its spectacular views of the Chagres River, is partly old and partly new. The hotel includes a row of early-twentieth century jungle-colonial wooden houses, once the homes of the high muck-a-mucks of the dredging division, which developer Herman Bern has painted in gay yellows and pinks, turning them into seventy luxury villas. Up the hill from the villas Bern has built a brand-new luxury hotel and spa, whose architecture is inspired by the late lamented Tivoli Hotel, the haunt of Teddy Roosevelt, the U.S. president who pushed through the canal.

Bern, like the Canopy Tower's Raul Arias, is also a firm believer in the idea that Panama's exuberant tropical plant and animal life can be turned into a powerful magnet drawing thousands of nature-loving, bird--watching tourists here. Aside from the usual tennis courts and swimming pool, the Gamboa Resort boasts a reptile house, a green house with some thirty-eight hundred different species of orchids, aquariums, a nearly mile-long cable-car system that threads its way through the jungle canopy, and a frog pond. Panama, he repeats like a mantra, has many more bird species than next-door Costa Rico, which has become a regional Mecca for ecotourists, who spend about $900 million a year. In the future, he says, Panama could draw more tourists than its northern neighbor.

Another convert to ecotourism is the Smithsonian Tropical Research Institute, the Panamanian arm of Washington's Smithsonian Institution, which is helping Bern, and other hoteliers by, among other things, training guides and helping to lay out nature paths.

"It ain't rocket science," says Ira Rubinoff, the institute's director. "Certainly people threading through paths and looking at birds are less of a problem than people cutting down forests to put in a cow pasture or a corn field."

On Panama's Atlantic side. Spain's Grupo Sol Metia hotel chain has plunked dawn $25 million to turn the installations of the infamous School of the Americas, the alma mater of a rogue's gallery of Latin American military dictators and human rights violators, into a 310-room hotel, aimed at business travelers visiting the nearby Colon Free Zone. At the renamed Melia Panama Canal, which just opened its doors in June, there are no suites named after General Antonio Noriega, the Panamanian strongman who learned the fine points of psychological warfare here, nor the late Major Roberto d'Aubuisson, the notorious Salvadoran death squadder who took a course in radio communications. A toppled anti-aircraft gun that used to decorate the front entrance of the old school has been moved to a less conspicuous place, and the old barracks and classrooms, repainted a burnt orange, now exude a Mediterranean warmth.

Sol Melia's Zenon Jimenez, in charge of the transformation, was careful to keep intact a small cement amphitheater overlooking Lake Gatun, where in the old days student-officers would be briefed on the day's maneuvers. And just as well. These days, stressed-out businessmen listen to howler monkeys and drink daiquiris perched where Latin military men and their U.S. confreres used to worry about the Communist threat. Although the hotel plans to open a small museum about its checkered past, Jimenez says history while not a selling paint does draw some guests: Some School of the Americas alumni are planning a reunion at their old alma mater.

Aside from investing in tourism, companies are spending millions to take advantage of Panama's historic role as a world crossroads. Modern container ports have been built on the Caribbean side of the canal, and a railroad linking Colon on the Caribbean, and Panama City on the Pacific, is scheduled to be finished next year.

And that's not all. Panama's Inter-Oceanic Regional Authority or ARI, the agency in charge of developing the old Canal Zone, has other ambitious plans for the recycling of the dozens of military bases, airfields, and other installations left by the U.S. For instance, in Fort Clayton, once the cavernous home to thousands of U.S. soldiers, the ARI is developing a "City of Knowledge"---where it hopes a mix of high-tech companies will set up shop alongside universities from around the world interested in studying Panama's tropical biodiversity.

Perhaps the most ambitious of all the projects calls far world-renown architect Frank Gehry to design signature buildings on both sides of the Panama Canal: an "Aquarium of the World" on the Pacific side, and a natural museum on the Caribbean side. It remains to be seen, however, whether these plans will become more than sketches in a sketchbook.

Jose de Cordoba is a staff writer for the Wall Street Journal.