If I were you I would try to politely decline it. You really shouldn't have a problem doing so. But it also isn't something that I feel so strongly about that I would make it my main concern. You can always wipe it out of the babe's eyes.
You will also need to be very vigilant about it, especially if they take the babe to the nursery for anything. I watched, helplessly, as the nurse in the nursery gave my sister's babe the ointment (even though I knew she didn't want it and she had told her midwife). She had had an unexpected c/s and the babe was taken to the nursery while she was in recovery.
I was able to decline it easily after a c-section - no going through the vaginal canal - no chance of contracting anything. It is annoying. I would probably not choose this as one of my battles (but they were amenable to it at the hospital I was at). It is way better than the stuff they used to use, which really was painful for babies.