The small town of Balboa, Panama, is at the Pacific end of the canal and adjacent to Panama City. Once part of the U.S.-controlled Canal Zone, its former military buildings, barracks and officers' quarters have been converted to shops, offices, schools and luxury homes. The big buildings, broad tree-lined streets and wide lawns of Balboa—all laid out in an orderly U.S.-tropical-company-town style—provide a stark contrast to the narrow streets of the old parts of nearby Panama City.

Definitely worth a visit is Balboa's Canal Administration Building. The building's rotunda, which resembles the one in the U.S. Capitol, is surrounded by fantastic murals that tell the dramatic story of how the canal was built. At the base of the building, the Goethals Monument commemorates Gen. William Goethals, the chief engineer in charge of the Panama Canal construction project 1906-14. From there, a broad tree-lined boulevard leads to Steven's Circle; turn left at Balboa Road to see Union Church and the surreal Monumento a Los Martires (Martyrs' Monument).

Near the Administration building, a road leads sharply uphill to the summit of Ancon Hill, offering sweeping views over Panama City and the Canal. On its lower east side is Los Pueblitos, which has replicas of a Spanish colonial village, a Caribbean village and villages typical of Panamanian ethnic groups.

If you want to shop, the folk market housed in the former YMCA building at Stevens Circle in Balboa is a good place to buy local handicrafts. It's a small market, where no one hassles you to buy. Indigenous people from the San Blas Islands are there with plenty of molas (embroidery pieces) to sell. (If you will be visiting the San Blas Islands during your trip, you may prefer to buy molas there. The selection is better.)

South of Balboa, Fort Amador, once a U.S. military installation, is now a marina, as well as the main cruise ship terminal in Panama, and many tours of the city and canal are offered from there. Flamenco Island, where the fort is located, features numerous restaurants, bars and shops.

The Causeway stretches out from the end of Fort Amador to three small islands, affording great views of the canal, the Bridge of the Americas, which crosses the canal, and Panama City. Several rustic waterfront restaurants are found along the Causeway. On Isla Noas, the first of the three islands, there's a Marine Exhibition Center with ecological displays and an interpretive nature trail. The best way to see the Fort Amador complex and the Causeway leading to the islands is to either walk (if the weather isn't oppressive) or rent a bicycle. As a former U.S. military installation, the paths and roads are laid out in a clearly defined order and are in immaculate condition.

Just past Balboa are the impressive Miraflores Locks, the most convenient viewing point for the canal (with a nice visitors center).

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