The 2002 presidential and legislative elections shattered the stable two-party system that the country had enjoyed for several decades. Although the PUSC retained the presidency, its nominee, Abel Pacheco de la Espriella, was forced into an unprecedented runoff, as no candidate garnered at least 40 percent of the vote in the first round. In elections to the Legislative Assembly, the Citizen Action Party (Partido Acción Ciudadana; PAC) won 14 seats, denying an overall majority to either the PUSC or the PLN.

The following year Costa Rica’s Supreme Court annulled the 1969 legislative reform of the constitution that limited a president to a single four-year term, thus reverting to the 1949 constitution, which enabled a former president to seek the presidency again after having been out of office for eight years. The annulment allowed former president and Nobel Peace Prize winner Arias to announce his candidacy for president in 2004. During this time, Pacheco’s administration experienced a growing budget deficit and was scarred by the discovery of funds from his campaign in Panamanian banks. In late 2004, Costa Rica’s immediate past three presidents—Calderón Fournier and Rodríguez of the PUSC, along with Figueres of the PLN—were accused of accepting bribes. Moreover, Rodríguez was forced to resign as secretary-general of the Organization of American States to return to Costa Rica to respond to these corruption charges.

Arias won the presidency in the 2006 elections, beating Ottón Solís Fallas of PAC by a slim margin. He proposed ending state-run monopolies in electric power, social security, and telecommunications and favoured ratifying the Central America–Dominican Republic Free Trade Agreement (CAFTA–DR) with the United States, despite protests from trade unions and other organizations. Costa Rican citizens voted in favour of the agreement by a narrow margin in the country’s first national referendum, held in 2007. In the process Costa Rica became the last Central American country to ratify the agreement. Also in 2007, President Arias officially established diplomatic relations with China in an effort to promote trade and economic cooperation, breaking off 60 years of formal ties with Taiwan.

On July 13, 2009, the International Court of Justice seemingly settled a longtime dispute between Nicaragua and Costa Rica over the latter’s use of the San Juan River. In the ruling, the court granted Costa Rica the right of free navigation on the river not only for commerce but also for tourism. The dispute boiled over again late in late 2010, however, when Nicaragua began dredging the river. Costa Rica protested that the action was a violation of its sovereignty and was causing environmental damage to the wetlands in the area. Nicaragua sent troops, and Costa Rica mobilized members of its police force. After the Organization of American States requested that both countries remove their forces from the area, Nicaragua refused. Costa Rica filed a brief with the International Court of Justice, which in March handed down a provisional ruling that instructed both sides to remove their forces. Nicaragua was allowed to continue dredging the river, but Costa Rica was permitted to send civilians to monitor potential environmental damage. Both sides claimed victory, and the matter was largely defused.

Earlier, in February 2010, Costa Ricans elected their first female president, Laura Chinchilla of the PLN. Winning 47 percent of the vote, she easily defeated the second-place candidate, Solís, who had been Arias’s main challenger in 2006. Although some opponents likened Chinchilla to a puppet of the outgoing president, she wooed many voters with her pledge to fight violent crime and drug trafficking. Almost from the beginning of Chinchilla’s tenure, however, her administration was undermined by a series of scandals that resulted in the resignation of many cabinet ministers and contributed mightily to her growing unpopularity. Chinchilla’s failure to make progress in furthering long-standing legislative initiatives—especially tax reform—did not help matters. By 2013 her approval rating had approached single digits even as the economy grew and inflation moderated.

The election of dark-horse candidate Luis Guillermo Solís of the PAC as president in April 2014 gave that party its first presidential victory over the PLN and PUSC. Not only did Solís win, but his commanding lead in a popularity poll that preceded the second round of voting also prompted his runoff opponent, Johnny Araya of the PLN—longtime mayor of San José and the leading contender to replace the deeply unpopular Chinchilla—to withdraw from the contest. The PAC won only 13 of the 57 available legislative seats but was able to form a ruling coalition.

Public schools and health services virtually ground to a halt across the country on April 26–27, 2016, as a result of an organized labour action dubbed the “Mother of All Strikes.” The strike began with a march on the Legislative Assembly by an estimated 40,000 demonstrators. It was focused on a 16-point list of demands that included defense of labour rights, a call on the wealthy to pay their fair share of taxes, and an opposition to cuts to the public health service and the conversion of the existing 13 percent sales tax to a 15 percent value-added tax on a wider range of items.

In May 2016 the Costa Rican government requested an advisory opinion from the Inter-American Court of Human Rights regarding same-sex marriage—which was not recognized in Costa Rica—and transgender rights. As a signatory to the American Convention on Human Rights (1969), Costa Rica was bound to abide by the court’s ruling. When the court ruled in January 2018 that its signatory countries must permit same-sex marriage, the Costa Rican government began taking steps to comply. Those actions had an immediate and immense impact on the Costa Rican presidential election, which was in full swing. Having expressed adamant opposition to the ruling, Fabricio Alvarado Muñoz, a well-known Pentecostal singer, onetime TV journalist, and member of the Legislative Assembly, emerged from the back of the pack to finish ahead of the other presidential candidates in the first round of voting in early February. He captured some 25 percent of the vote and prepared to face the second-place finisher, Carlos Andrés Alvarado Quesada, a novelist who served as labour minister in the PAC government of Solís, in a runoff election in April. Opinion polling predicted a close second-round contest, but, when the votes were counted, Quesada trounced Muñoz by capturing some three-fifths of the total vote.

Costa Rica had long been bedeviled by its ever-increasing national debt, but the issue reached crisis proportions when the country was rocked by the economic consequences of the coronavirus SARS-CoV-2 global pandemic in 2020. That year Costa Rica’s tourism-dependent economy withered in response to the safety measures imposed to combat the spread of the virus. GDP contracted by 5 percent, and unemployment surpassed 24 percent. Moreover, the proportion of Costa Rican households living below the poverty line increased to one-fourth. To secure funding to support Costa Ricans hit hardest by the pandemic’s economic dislocation, the government negotiated a $1.75 billion loan from the IMF; however, that agreement came with a requirement that Costa Rica right its ship fiscally and dramatically reduce its external debt, which had risen to 70 percent of GDP. The Quesada government’s announcement that it would be raising taxes and reducing salaries for some government employees was greeted in September 2020 by weeks of street protests that turned violent. Responding to the uproar, the government rescinded its austerity plan, effectively putting fiscal reform on hold.

The first round of the presidential election in February 2022 failed to produce a candidate with the 40 percent vote share necessary to preclude a second round. The runoff election in April featured a pair of candidates with skeletons in their closets: former president José María Figueres Olsen was dogged by allegations that he had accepted $900,000 in bribes in the early 2000s, and his opponent, Rodrigo Chaves Robles, a conservative economist and former finance minister, had seen his career at the World Bank undermined by charges of sexual harassment. In the April runoff Chaves claimed some 53 percent of the vote to become president. More than 43 percent of eligible voters chose not to participate in the election, seemingly a reflection of their general lack of enthusiasm for either candidate.